SKN | Bitcoin’s Q4 Lag Behind Stocks May Set the Stage for a January Rebound, K33 Says

While near-term price action remains muted, analysts at K33 argue that bitcoin’s pronounced underperformance relative to equities during the fourth quarter could paradoxically set up a constructive start to 2026. The divergence, they say, may prompt rebalancing-driven inflows as asset managers adjust portfolios to align with target allocations.

A Rare Divergence Between Bitcoin and Equities

Historically, bitcoin has tended to move in broad alignment with U.S. risk assets, particularly during liquidity-driven rallies. That relationship has weakened in recent months. Through the fourth quarter, bitcoin has lagged the S&P 500 by roughly 26%, according to K33 data, even as U.S. equity indices pushed toward new highs.

K33 head of research Vetle Lunde pointed out that similar divergences earlier this year were followed by mean reversion. When bitcoin underperformed equities in the first quarter of 2025, it began the second quarter with gains. Conversely, when it outperformed in the second quarter, early third-quarter performance softened.

This pattern suggests that portfolio mechanics, rather than pure sentiment, may play an increasingly important role in short-term price dynamics as bitcoin becomes more embedded in institutional allocation frameworks.

Rebalancing Could Drive Early-Year Demand

As the calendar turns, many institutional investors rebalance portfolios to maintain predefined weightings across asset classes. In periods where bitcoin significantly underperforms equities, those rebalancing flows can translate into incremental buying pressure.

“Fund managers with predetermined bitcoin allocation targets may adjust weights into year-end or early January,” Lunde wrote, adding that this process could result in excess inflows during the final trading days of December and the opening weeks of the new year.

This effect may be amplified by the growing presence of spot bitcoin ETFs, which have made rebalancing more frictionless for traditional asset managers. Even modest percentage adjustments across large portfolios can translate into meaningful spot demand.

Market Activity Remains Subdued

Despite the potential for rebalancing-driven flows, current market data points to widespread caution. Derivatives activity on the Chicago Mercantile Exchange remains near yearly lows, with bitcoin futures open interest hovering around 124,000 BTC. On perpetual swap markets, funding rates are close to neutral and open interest has shown little directional expansion.

Spot trading volumes tell a similar story. Aggregate crypto spot volume is down roughly 12% through last week, reflecting year-end fatigue and a reluctance among traders to initiate new positions without a clear macro or policy catalyst.

FalconX’s head of sales Josh Barkhordar described the prevailing mood as “cautious optimism,” noting that many investors are maintaining core bitcoin exposure while holding elevated cash balances elsewhere.

Positioning for January

Bitcoin’s ability to hold above recent lows while equities remain firm suggests that downside pressure may be easing, even if conviction is still lacking. The combination of suppressed volatility, light positioning, and structural underperformance relative to stocks creates a setup where modest inflows can have an outsized impact.

That does not guarantee a sustained rally. Macro uncertainty, central bank signaling and broader risk sentiment will remain decisive. But as history has shown, periods of relative weakness often precede tactical rebounds once portfolio mechanics come into play.

As January approaches, the key question is whether rebalancing flows and renewed participation are enough to push bitcoin out of its current range — or whether caution will continue to dominate the opening weeks of the year.