Bitcoin’s recent attempt to recover from a significant overnight decline quickly lost momentum during the U.S. morning session on Monday, as broader risk markets took a sharp downturn.
At around noon on the East Coast, Bitcoin was trading at $65,400, reflecting a staggering 35% drop over the last 24 hours.
This decline coincided with a slump in U.S. equities. The S&P 500 and tech-heavy Nasdaq 100 both fell by more than 1%, primarily driven by renewed weaknesses in software stocks and private equity firms.
The iShares Expanded Tech-Software ETF (IGV) plummeted another 5%, reaching a new low for the year and marking nearly a 35% decrease since October. Concerns that generative AI tools could disrupt traditional software business models have fueled this downturn. Regardless of its accuracy, current market sentiment suggests that cryptocurrencies are viewed as merely software products; recently, Bitcoin’s price movements have closely mirrored those of IGV.
Compounding these bearish sentiments are ongoing fears that AI advancements might be pushing markets toward an impending major credit crisis reminiscent of the global financial meltdown in 2008. This concern is evident in private equity stock prices, which are heavily tied to the aforementioned software sector. Blow Owl Capital (OWL), which sold assets last week to appease liquidity-seeking investors, saw its shares drop another 3.5% on Monday and has fallen by 32% year-to-date. Similarly affected were BlackStone (BX), Ares Management (ARES), and Apollo Global Management (APO), all experiencing additional losses ranging from 6% to 8%.
Cryptocurrencies often behave like high-beta proxies for technology stocks and overall liquidity conditions; thus, Monday’s declines reflect this relationship clearly. While Bitcoin has managed to stay above its early February lows so far, it continues to trade within a narrow range between $60,000 and $70,000 due to fragile risk appetite among investors.
Furthermore, uncertainty surrounding global tariffs following Supreme Court restrictions on President Trump’s previous broad levies adds another layer of complexity to market dynamics,” noted Joel Kruger from LMAX Group.
“This situation has created an environment characterized by risk aversion,” Kruger stated further.” Investors have retreated from speculative assets such as cryptocurrencies with Bitcoin behaving more like a high-risk asset rather than ‘digital gold.’