The U.S. Federal Reserve announced its third interest rate cut this year on Wednesday, lifting U.S. stocks while Bitcoin (BTC) fell before rebounding.

This lively has defined the second half of 2025. Even though capital flows into Bitcoin are increasingly tied to time-honored equity investors, the cryptocurrency continues to diverge from the stock market.

Over the last six months, Bitcoin has fallen by almost 18%. Meanwhile, the three major U.S. stock indexes posted forceful and consistent gains, with the Nasdaq Composite up 21%, the S&P 500 up 14.35% and the Dow Jones Industrial Average up 12.11%.

Bitcoin continued to record significant milestones this year, including setting modern all-time highs and avoiding the typical “Red September” for the third year in a row.

Here’s how Bitcoin’s divergence from stocks deepened in the second half of the year.

July: The GENIUS Act abolishes cryptocurrencies

July 2025 was characterized by forceful capital market performance and resilient risk appetite, which continued despite significant tariff announcements.

Trade rhetoric in early July sparked some brief turmoil, but markets quickly refocused on corporate earnings and growth fundamentals.

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On July 9, AI chip giant Nvidia became the first company to reach a $4 trillion valuation. On the same day, stock markets shrugged off trade shocks as the S&P 500 and Nasdaq posted modern record highs even after the US announced 50% tariffs on copper.

Bitcoin ended July with an 8.13% gain, marking its highest monthly performance in the second half of the year to date, including December. Cryptocurrency markets strengthened after US President Donald Trump signed the GENIUS Act, which brought fresh optimism to the sector, especially for stablecoin companies.

Corporate adoption also remained a key theme, with companies continuing to add Bitcoin to their balance sheets as part of their digital asset treasury strategies. In July, interest in other major cryptocurrencies, including Ether (ETH) and Solana (SOL), also began to escalate.

August: Powell’s speech powers ATH Ether

August was fueled by rising expectations that the Federal Reserve would soon cut interest rates. These hopes sparked a broad rally in time-honored markets, while cryptocurrencies moved even faster. Bitcoin rose to a modern record high of around $124,000 on August 14 as the US dollar weakened amid rising trade tensions.

Then the Jackson Hole Economic Symposium brought markets’ attention back to monetary policy. On August 22, Fed Chairman Jerome Powell issued a dovish signal, suggesting that interest rate cuts were still possible later in the year, pushing Ether to a modern record high.

Stocks reacted positively, but Bitcoin failed to maintain its momentum. The asset saw a pointed but short-lived escalate immediately after Powell’s speech, before falling again. At the end of the month, Bitcoin’s post-ATH correction clearly deviated from time-honored markets. Bitcoin closed August with a decline of 6.49%.

September: First rate cut in 2025

September has historically been Bitcoin’s weakest month. Along with June, it is one of only two months in which the average monthly return is negative, earning it the nickname “Red September.”

However, in 2025, Bitcoin bucked this trend, recording a third consecutive positive September. The gain came as the Fed made its first interest rate cut of the year, a 25-basis-point cut that was justified by signs of a cooling labor market. Bitcoin ended the month with a gain of 5.16%.

Related: Bitcoin will beat the ‘Red September’ decline for the third year in a row

Stocks also responded positively, extending the third-quarter rally as markets priced in the likelihood of additional monetary easing in October.

However, Bitcoin faced a modern, internal challenge. The community has divided over a major network upgrade that will remove limits on the amount of any data that can be embedded on the blockchain.

Bitcoin Core, the software implementation most commonly used by miners and node operators, supported lifting the cap. Those who view non-financial data on Bitcoin as spam opposed this change, contributing to the increased adoption of Bitcoin Knots as an alternative implementation.

October: Trump threatens 100% tariffs on China

Bitcoin hit another all-time high on October 6, but that month was ultimately defined by the largest liquidation in Bitcoin history, which wiped out approximately $19 billion worth of positions.

Several factors have been identified as contributing to the liquidation cascade that caused Bitcoin to fall below $110,000. These included a pricing glitch on Binance and the industry’s bulky reliance on futures trading, which compounded forced liquidations as prices fell.

However, the direct catalyst was President Trump’s social media post threatening to introduce 100% tariffs on Chinese imports. The comment sparked a pointed sell-off in both the cryptocurrency and stock markets.

While October is often referred to as Uptober in the crypto community due to its historically forceful performance, 2025 has proven to be an exception. Bitcoin snapped a five-year streak of positive Octobers and ended the month down 3.69%, even as major stock indexes rebounded from the trade shock.

At the end of the month, the Fed made its second consecutive rate cut, lowering the federal funds rate by another 25 basis points. Meanwhile, the U.S. government remained shut down throughout October, extending the longest government shutdown in history.

November: End of US government shutdown

October may be nicknamed Uptober, but November has historically been Bitcoin’s strongest month, recording an average gain of 41.12% – more than double October’s average return of around 20%.

In 2025, November turned out to be Bitcoin’s worst month of the year, with the value of the asset falling by 17.67%. Selling pressure intensified throughout the month, pushing Bitcoin below the $100,000 level by mid-November.

The divergence from equities was clear. Stock markets fell mainly after the end of the US government shutdown. Investors remained cautious amid concerns about a potential AI-fueled bubble. Some of these concerns were alleviated at the end of the month after Nvidia reported record profits for the third quarter, which helped stabilize the mood on technology stock exchanges.

Bitcoin’s year-end target has been lowered

Bitcoin is up about 2% so far in December, and major stock indexes have also posted moderate gains. Bitcoin’s average December return as of this writing is currently 4.54%.

While the holiday season has been relatively still for Bitcoin in recent years, history suggests that the cryptocurrency market doesn’t necessarily leisurely down during the festivities.

In December 2020, for example, Bitcoin’s price surged nearly 47% even as the U.S. Securities and Exchange Commission delivered shocking news: the initiation of a multi-year lawsuit against Ripple Labs and its executives.

This year, much of the optimism around Bitcoin’s potential year-end growth has waned. Several market observers lowered their price targets for the cryptocurrency, including Standard Chartered.

The bank had previously forecast a year-end price of $200,000 for Bitcoin, but on Monday it revised that price target to $100,000. Standard Chartered also delayed its long-term forecast for Bitcoin reaching $500,000, pushing the target from 2028 to 2030.

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