Cryptocurrencies began the shortened U.S. trading week on a downward trajectory as Bitcoin witnessed a notable decline, slipping below the $67,000 mark on Tuesday. This movement came after the cryptocurrency had maintained a relatively tight range between $68,000 and $70,000 over the preceding weekend. The downturn in Bitcoin’s value was mirrored by a softened opening in U.S. equities, particularly impacting the beleaguered software sector.
The iShares Expanded Tech-Software Sector ETF (IGV) fell by 3% and is now down 30% from its October highs, reflecting significant pressure on software stocks. Concerns have arisen that advancements in artificial intelligence (AI) tools pose a substantial threat to established business models in this sector. As markets gauge potential impacts, the prevailing belief is that Bitcoin, often likened to software, could be similarly affected by these dynamics.
Both the broader Nasdaq and the S&P 500 indices faced losses, with drops of 0.8% and 0.6%, respectively. Meanwhile, the rally that had previously characterized precious metals also showed signs of cooling. Gold prices declined by 3%, settling around $4,860 per ounce, while silver experienced a more severe drop of 6%, reflecting a nearly 40% decline from its peak in late January.
Crypto-related equities followed suit, retracing some of the gains made on Friday. Notably, MicroStrategy (MSTR), which holds the largest corporate stash of Bitcoin, saw its shares decrease by approximately 5%. Similarly, Circle (CRCL), the issuer of the USDC stablecoin, also faced a 5% decline. Other prominent players in the cryptocurrency mining and data center landscape, including Riot Platforms (RIOT), Marathon Digital Holdings (MARA), CleanSpark (CLSK), Cipher Mining (CIFR), and TeraWulf (WULF), shared a similar fate, each declining by around 4% to 5%.
Paul Howard, senior director at trading firm Wincent, emphasized the continued connection between crypto assets and macroeconomic sentiments, stating that “Macro news has been closely correlated with crypto’s risk profile the last 12 months.” As market participants await a significant ruling from the U.S. Supreme Court regarding tariffs later this week, Howard speculated that this could serve as a more substantial catalyst than routine economic releases.
He further noted that, in the interim, a period of consolidation is likely, with Bitcoin and the wider digital asset market on the lookout for a compelling narrative that could redirect capital away from trending AI stocks and commodities. “Crypto has some work to do recreating itself as an appealing asset class, and the relatively low prices are not attractive enough,” he concluded.
