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 cited “price stability” on multiple occasions, signaling the new Federal Reserve mandate will maintain closer scrutiny of inflation trends. Crude oil prices fell to $74, their lowest level in 15 weeks, easing some inflation concerns, but the US dollar strengthened against a basket of foreign currencies, penalizing non-yielding assets. Gold prices traded down 3.3%, and the US 5-year Treasury yield held at 4.21%.
Meanwhile, capital flowed into technology and AI-related equities. A memorandum of understanding signed by US President Donald Trump and Iran’s President Masoud Pezeshkian bolstered stock market bullish momentum. Intel shares jumped 10% following a Trump announcement, while the company announced a partnership with Apple to build processors. Micron and SK Hynix recently joined a select list of companies valued at $1 trillion or higher. SpaceX’s recent IPO valued the company at $2.4 trillion within days of going public.
The Nasdaq 100 index traded 1% away from all-time highs, contrasting sharply with Bitcoin’s weakness. US job market data remained stable, with continuing jobless claims holding flat at 1.81 million, providing little catalyst for risk-off sentiment in equities.
Despite the recent decline, Bitcoin ETF inflows have accumulated substantial assets. US-listed spot Bitcoin ETFs held $102 billion in assets, and major financial institutions including Morgan Stanley, Bank of America, and Goldman Sachs have initiated Bitcoin investment offerings. Whether institutional demand will stabilize prices remains uncertain as the sector absorbs the shift in capital allocation toward AI-exposed equities.
