The weakness coincided with a soft opening in the U.S. stock market, especially in the battered software sector.
The iShares Expanded Tech-Software Sector ETF (IGV) is down 3% and now sits 30% below its October high. Software stocks are under pressure as improving AI tools are perceived as a threat to their business models.
Markets form opinions, and the current shibboleth says bitcoin is just software, so if AI threatens the sector, it also poses a threat to bitcoin, writes coindesk.com.
The broad Nasdaq index was down 0.8 percent and the S&P 500 index fell 0.6 percent.
Gold fell 3% to about $4,860 an ounce, while silver collapsed another 6%, remaining about 40% below its peak in late January.
Cryptocurrency-related stocks also declined, rebounding from some of Friday’s sharp gains. Strategy (MSTR), the largest corporate bitcoin holder, fell about 5%, while a similar decline was recorded for USDC’s stablecoin issuer, Circle (CRCL).
Bitcoin miners and data center companies Riot Platforms (RIOT), MARA, CleanSpark (CLSK), Cipher Mining (CIFR) and TeraWulf (WULF) lost about 4%-5%.
Cryptocurrency in search of a narrative
Paul Howard, senior director at trading firm Wincent, said cryptocurrency remains closely tied to the macroeconomic news segment.
“Macroeconomic news has correlated closely with the risk profile of cryptocurrencies over the past 12 months, and macroeconomic data is expected to remain weak, implying a risk-averse trading sentiment,” Howard said.
He pointed to the U.S. Supreme Court’s decision on tariffs, expected later this week, as a potentially more significant short-term catalyst than normal economic data.
For now, he expects further consolidation as bitcoin and the broader digital asset market look for a strong new agenda to bring capital back from AI-related stocks and commodities.
“Cryptocurrency has work to do to recreate itself as an attractive asset class, and relatively low prices are not attractive enough,” Howard said.
