Cryptocurrencies started the shortened US week on the defensive, with bitcoin falling below $67,000 on Tuesday, falling below its tight weekend range of $68,000-$70,000.
The weakness coincided with a weaker opening for U.S. stocks, especially the battered software sector. The iShares Expanded Software and Technology Sector ETF (IGV) was 3% lower and now 30% below October’s high. Software stocks have been under pressure, with improving artificial intelligence tools seen as a threat to their business models. Markets make opinions, and current dogma says that bitcoin is just software, so if AI is a threat to that sector, it is also a threat to bitcoin.
Read more: Bitcoin’s correlation with troubled software stock sector is growing
The broader Nasdaq fell 0.8% and the S&P 500 fell 0.6%.
Meanwhile, the once-parabolic rally in precious metals continued to cool. Gold fell 3% to around $4,860 an ounce, while silver fell another 6%, leaving it about 40% below its late January high.
Cryptocurrency-related stocks also retreated, recovering some of Friday’s strong rebound. Strategy (MSTR), the largest corporate bitcoin holder, fell around 5% with a similar drop for USDC stablecoin issuer Circle (CRCL). Bitcoin miners and data center names Riot Platforms (RIOT), MARA, CleanSpark (CLSK), Cipher Mining (CIFR), and TeraWulf (WULF) fell approximately 4% to 5%.
Crypto in search of a narrative
Paul Howard, senior director at trading firm Wincent, said cryptocurrencies remain firmly tied to macro sentiment.
“Macro news has been closely correlated with the risk profile of cryptocurrencies over the past 12 months and expectations are for macro numbers to remain weak, implying a risk-off trading mindset,” Howard said.
He pointed to the U.S. Supreme Court’s ruling on tariffs expected later this week as a potentially bigger near-term catalyst than routine economic data.
For now, expect further consolidation as Bitcoin and the broader digital asset market search for a new narrative strong enough to pull capital out of AI stocks and commodities.
“Cryptocurrencies have work to do to recreate themselves as an attractive asset class and relatively low prices are not attractive enough,” Howard said.
