Bitcoin has underperformed US stocks for six consecutive months. In extreme fear, is this the bottom or still the abyss?

Byline: Coach Liu

After waking up, BTC edged back up to 68 k. President Trump’s remarks signaled a possible intent to wrap up the war effort quickly. But how safe-haven assets move—this is what truly shows how much the market actually believes this whole fiasco set on fire can escape as smoothly as hoped.

Bitcoin’s Q1 performance report is out: it’s down more than 20%. By itself, that figure isn’t all that surprising—after all, in the crypto world, a 50% drop doesn’t even count as news. What Chain wants to pay attention to is another set of data: since October 2025, Bitcoin has been underperforming the US stock market for six straight months [1].

This seems like it has never happened before.

The founder of Risk Dimensions, Mark Connors, used a very straightforward word to describe it: unprecedented [1]. Chain dug through historical data. Bitcoin’s prior pullbacks were indeed more severe than this, but the duration has never been this long. In the past, it fell hard and then recovered quickly—this time, it just lies on the ground and won’t get up.

Even more puzzling is the sentiment indicator. Cointelegraph’s data shows the Crypto Fear and Greed Index has been stuck at 11 for 12 straight days, staying in the extreme fear zone [2]. Since January 28, this index hasn’t left.

When traditional traders see these readings, their first reaction is often to buy the dip. After all, the Fear and Greed Index is a contrarian indicator, and extreme fear usually corresponds to buying opportunities. But this time, the market doesn’t seem to be buying what it’s selling. Some people have started to question whether this signal might have failed.

Chain thinks: to answer that question, you first need to take your eyes off the price and look at what’s actually happening on-chain.

CryptoQuant’s analyst provided a very interesting data point: the share of Bitcoin whale addresses has already surpassed 60%, reaching a ten-year high [2]. At the same time, retail investors’ share has fallen to the lowest level over the same period.

This data point in itself isn’t strange—whales accumulating during a bear market is standard practice. But the 60% figure is worth focusing on. The analyst’s exact words were: generally, when the whale proportion hits its highest point, it often indicates a bottom [2].

Another on-chain signal worth watching comes from a different analyst. He found that the share of short-term holders—that is, the cohort holding for one week to one month—has fallen to 3.98% [2]. In previous cycles, when this number has been below 4%, it has often corresponded to the stage when the market is nearing a bottom.

The logic behind this is quite simple: speculators have left, while long-term holders remain. With fewer short-term activities, there are fewer fast in-and-out trades; turnover is shifting from dispersed retail investor hands to concentrated whale accounts.

It sounds like a bottom signal, but things may not be that simple.

Chain has always emphasized one viewpoint: you can’t judge the market by only one dimension. On-chain data does reveal signs of accumulation, but the macro environment and sentiment indicators are also not meaningless.

CoinDesk reported that in early March, the escalation of the Iran–US conflict caused global markets to shake three times. Oil prices jumped, the US dollar strengthened, and even safe-haven assets like gold saw significant swings—because it’s simple: margin calls forced institutions and sovereign entities to sell gold to replenish liquidity [1].

What’s interesting is that during this bout of turmoil, Bitcoin has been holding up quite steadily. In March, it actually rose by about 1%, while gold fell 11% over the same period [1]. Connors believes this is thanks to the prior deleveraging process, which has already cleared out most of the overly high leverage positions. In addition, the cross-border flow characteristics of Bitcoin also limit the scale of forced selling [1].

But whether this performance can continue depends on one key variable: geopolitics.

Connors’s view is very direct: the timing for a reversal is either two months or two years [1]. The gap in between depends on how the Iran conflict plays out. If the conflict escalates, the energy market, liquidity, and global risk appetite will all be dragged down. As a risk asset, Bitcoin would have a hard time staying unscathed.

So will the signal fail?

Chain has long reminded readers that historical patterns are meant to be referenced—not used for blind faith.

There are several special circumstances worth noting this time. First, Bitcoin has underperformed US stocks for six straight months; this imbalance period has no precedent in history. Bitcoin’s own prolonged weakness could itself become a driver for a reversal, but it could also mean the market structure has fundamentally changed—for example, Bitcoin is moving away from being a safe-haven asset and back into the ranks of risk assets.

Second, the extreme fear signal has lasted too long. From January 28 to now, the Fear and Greed Index has never left the extreme fear zone. Prolonged pessimism will wear down investors’ patience; some people may not be able to hold on and could cut losses and exit at the bottom.

Third, although the regulatory environment appears to be improving on the surface, there are disagreements internally. The US SEC has replaced its chairperson with a new one, clearing obstacles for more crypto ETFs; the GENIUS bill is also moving forward; and the executive order signed by Trump last August has also folded the 401(k) plan into alternative assets including cryptocurrencies. But the rules proposed by the US Department of Labor on Monday show potential differences among federal agencies [1]. This kind of uncertainty could dampen large-scale entry by institutional investors.

So what should be planned now?

Chain’s consistent stance is: investment decisions should be based on your own cycle judgment, investment actions should be based on your own plan, and you shouldn’t act recklessly.

For those with a three- to five-year long-term horizon, the current market does provide a relatively favorable buying window. The three signals—six months of underperformance versus US stocks, extreme fear persisting, and on-chain data hinting at accumulation—stack together, pointing to a market nearing a bottom. Dollar-cost averaging (DCA) or building a position in batches is a prudent choice. Don’t think about going all-in at once, and you should mentally prepare for volatility that could last for months.

If you’re a short-term trader, the current phase where Bitcoin’s correlation with US stocks has weakened does indeed offer an opportunity to pursue Alpha. But one point must be emphasized: market volatility is still very high. Once a key support level is lost—say, 60,000 US dollars—it could trigger another round of selling. For traders who don’t follow stop-loss discipline or for those who go all-in with overly large positions, they will most likely be forced out in the washout anyway.

And for those still on the sidelines, it mainly comes down to three indicators: on-chain data, tracking changes in whale address share and the short-term holder ratio; sentiment indicators, checking whether the Fear and Greed Index continues to break down or turns back up; and the macro environment, looking at the Iran–US conflict and Fed policy.

Chain’s final take is: the current market really does look like a compressed spring. Historical experience points to the bottom, but the longer the compression lasts, the more force the released energy may have. Whether it’s a rebound or a crash largely depends on which direction this geopolitical black swan flies. Based on the situation right now, it may be unwise to be overly optimistic.

References

[1] Sean Stein Smith, “This Crypto Sell-Off Points To Increased Institutional Influence In 2026”, *Forbes*, Feb 15, 2026

[2] Cointelegraph, “Crypto Fear and Greed Index stuck on ‘extreme fear,’ but is there a silver lining?”, *Cointelegraph*, Mar 31, 2026