Bitcoin fell as low as $59,023 on Wednesday, dropping 5.4% and breaking below $60,000 for the first time since October 2024 — a level traders have treated as significant support for much of the past two years. The move came as US equity markets extended a three-day losing streak, with the S&P 500 down 0.3% and the Nasdaq falling 0.8% in Wednesday afternoon trading. Asian markets also sold off earlier in the session, with chipmakers Samsung Electronics and SK Hynix among the hardest hit as investor appetite for stretched valuations continued to deteriorate.
The trigger is the same one that has been pressuring markets for weeks. Traders are increasingly betting that the Federal Reserve will raise interest rates to combat persistent inflation, and higher rates reduce the appeal of risk assets across the board — forcing investors to question valuations and move toward safer alternatives.
Crypto Is Underperforming Even When Stocks Recover
The more telling detail in Wednesday’s move is not that Bitcoin fell alongside equities — that has happened before — but that crypto has stopped recovering when stocks do. Bitcoin and Solana are down 32% and 47% respectively this year, and neither has participated meaningfully in the equity rallies that have occurred during the same period. The historical relationship between crypto and tech stocks, which moved closely together for much of the past several years, is showing signs of genuine strain.
The explanation most analysts are pointing to is retail. The traders who drove crypto’s momentum in previous cycles have not disappeared — they have redirected their attention and capital toward AI-related equity bets, which have offered the kind of volatility and narrative momentum that crypto once held exclusively. “Sentiment remains weak as notable public offerings and AI stocks have taken centre stage,” said Gerry O’Shea, head of global market insights at crypto asset manager Hashdex.
The SpaceX IPO, covered in this publication last week, is part of that dynamic. US capital markets are still digesting the largest public offering in history, and the gravitational pull of that listing — and the anticipated debuts of OpenAI and Anthropic — is competing directly with crypto for the speculative and growth-oriented capital that would otherwise flow into digital assets.
Bitcoin at $60,000 Is Not a Crisis
The price level matters less than what is driving it. Bitcoin has been below $60,000 before and recovered. What is different this time is the combination of factors aligned against a near-term recovery: rising rate expectations, four consecutive weeks of ETF outflows dominated by institutional redemptions from IBIT, retail attention absorbed by AI equity trades, and a macro environment where the risk-free rate is climbing while geopolitical uncertainty remains elevated.
The institutional Bitcoin holder base that ETFs brought into the market — covered in this publication when outflow data showed $1.72 billion leaving in a single week — was always rate-sensitive capital. It came in during a period of falling rates and accommodative financial conditions. It is now leaving as those conditions reverse. The crypto-native conviction holders will ride this out as they always have. The question is whether the new institutional layer that was supposed to provide a more stable demand base turns out to be as cyclical as everything that came before it. Wednesday’s price action suggests the answer may be yes.
