Bitcoin is being sucked lower in a broad risk-off trade that's also hammering the Nasdaq.
Bitcoin is down 4.4% now to $74,969. On the breaks the big figure, it could quickly test the weekly low of $74,564. A fall below that would be the lowest since November 2024, just before the US election. The Trump win that night set off a frenzy of crypto hopes and, to be fair, Trump generally delivered on the deregulation agenda.
However there were hopes (promises?) that he would create a crypto strategic reserve. That always sounded like a longshot given that it would need congressional approval but it didn't pan out in any case and it seems to be dead now. Instead, Trump used crypto for a series of con jobs, including his own coin and the much-derided Melania-coin. That sort of thing undermines the whole premise of crypto and it isn't a good look.
For much of last year and before, crypto traded like leveraged beta on the Nasdaq and Nvidia in particular but at some point last year it lost that quality. Instead, it was flat when tech rallied and underperformed on the downside. We're seeing that today as the Nasdaq falls 1.8%.
The other bull case for bitcoin was a US dollar debasement trade but that also hasn't worked. The dollar suffered a poor start to the year and gold/silver both went parabolic but none of that money seemed to flow into crypto. Worse yet, Tether's owners built a huge stockpile of gold. I take that as a sign of some crypto enthusiasts shifting their focus.
For now, this isn't a great look for bitcoin or for the broader market as risk appetite evaporates. I tend to think the trigger is the squabbling between OpenAI and Nvidia about chip usefulness and investments. That highlights that the froth is coming off the AI trade and companies are focused more on profitability.
Elon dumping xAI on SpaceX may also prove to be a turning point. I'm not sure how he can justify a +$200 billion valuation for the fourth-best AI company and the dregs of twitter but here we are.
