Bitcoin is at the worst levels in 15 months as it breaks below $67K for the first time since October 2024.
It's part of a swan dive since $90K on January 28. That's a harsh fall in a very short period of time. Since October 6 when Bitcoin hit $126K, it's down 48% in the worst drawdown in years.
On the longer-term chart there isn't much support nearby. The November 2024 low was taken out today and there's not real support until $50K, where I would expect some large bids to appear.
The drop in bitcoin is coinciding with a rout in tech stocks, particularly highly valued Mag7 names and software stocks. The sense in markets is that the AI bubble needs to deflate and the capex is too high.
Google posted a massively impressive quarter with unreal cash generation but shares are down 4% on even larger capex. Whether that's a bubble in itself or whether that spending will lead to disruption elsewhere is causing a U-turn in risk sentiment so far this month
Unfortunately for bitcoin, it didn't benefit on the way up as risk appetite increased. Instead, it's looking like levered beta to tech, but only on the downside. That's a rough paradigm during a tech shakeout.
With multiples in tech so high, these things can contract quickly. Another example is Palatir this week, which posted truly blowout earnings but has seen shares crater after an initial 10% pop. The company was trading at 50x sales and a 'good quarter' is no match for a compressing multiple.
Given those multiples, this tech selloff can run for awhile. Even at $40/share, Palantir is expensive on almost every metric.
In the bigger picture, I tend to think that bitcoin has lost its cool. The early adopters are in their 30s now and the sub-20 crowd don't see crypto as a path to riches. That's going to be tough to overcome as institutional money looks to AI and even gold instead.
