Nasdaq strength and capital rotation into AI stocks trigger sudden decoupling from crypto assets
Bitcoin declined 7% after failing to reclaim $67,200, marking a sharp reversal as the Nasdaq 100 strengthened and $330 million in bullish leveraged positions were liquidated. The decoupling signals a broader rotation of capital into artificial intelligence stocks, leaving non-yielding assets under pressure from a strengthened US dollar and elevated Treasury yields.
The selloff reflects deteriorating trader sentiment. Joe Carlasare, a commercial litigator and Bitcoin supporter, stated that “narratives that convinced people to buy Bitcoin have broken down.” Carlasare noted that current market conditions differ from the FTX collapse in November 2022, when nearly every asset class struggled. This time, only Bitcoin narratives have fractured while the AI sector thrives.
Demand for bullish leveraged Bitcoin positions began fading on June 4, according to perpetual futures funding rate data. The liquidations accelerated as Bitcoin failed to defend the $67,200 level, with the cryptocurrency having crashed from $73,700 to $61,300 in three days at one point during the recent volatility.
Macroeconomic headwinds compounded the pressure. Fed Chair Kevin Warsh has repeatedly emphasized “price stability,” signaling the new Federal Reserve leadership will maintain closer scrutiny of inflation trends. Crude oil eased over the week as an interim US-Iran accord took effect, with Brent steadying near $80 per barrel and on track for a weekly decline of around 8.5%, tempering some inflation concerns. At the same time, the US dollar strengthened against a basket of foreign currencies, penalizing non-yielding assets. Gold prices traded lower, and the US 5-year Treasury yield held near 4.21%.
The energy backdrop remained fragile. While the interim accord aimed to reopen the Strait of Hormuz, planned follow-up talks between the US and Iran in Switzerland were canceled, and transit through the strait stayed restricted, leaving the supply outlook uncertain.
Meanwhile, capital flowed into technology and AI-related equities. Intel shares jumped following a Trump announcement, while the company announced a partnership with Apple to build processors. The Nasdaq 100 index traded near all-time highs, contrasting sharply with Bitcoin’s weakness. US job market data remained stable, with continuing jobless claims holding near 1.81 million, providing little catalyst for risk-off sentiment in equities.
Despite the recent decline, spot Bitcoin ETFs continue to hold substantial assets, and major financial institutions including Morgan Stanley, Bank of America, and Goldman Sachs have introduced Bitcoin investment offerings. Whether institutional demand will stabilize prices remains uncertain as the sector absorbs the shift in capital allocation toward AI-exposed equities.
