As Cryptocurrency Strengthens as a Risk Asset, Bitcoin Cannot Escape Downward Pressure

In Monday trading in the U.S. markets, Bitcoin quickly lost its slight rebound from the previous night and resumed its downtrend. The current BTC price is around $70,890 (up 5.13% in the past 24 hours), reflecting a move that indicates a broader structural change in the market. As high-risk asset sectors like software and private equity sectors plummet across the board, cryptocurrencies are also exhibiting price movements similar to technology companies, and their role as “digital gold” is diminishing.

Risk-off Environment Pressures the Entire Cryptocurrency Market

When the U.S. stock market as a whole declines, the position of cryptocurrencies becomes even more fragile. With the S&P 500 and Nasdaq 100 each falling more than 1%, selling pressure on software-related sectors has intensified, with the iShares Expanded Tech-Software ETF (IGV) dropping 5% to hit a new 52-week low.

At first glance, this phenomenon appears to be merely a sector performance issue, but it actually offers important insights into the overall cryptocurrency market. Recently, investors have been seeking refuge due to concerns that tech companies’ traditional business models are threatened by the rise of generative AI, and this impact is cascading into the crypto market.

Bitcoin as a High Beta Asset in Reality

Market strategist Joel Kruger of LMAX Group captures the essence of the market. During periods when speculative assets are retreating, Bitcoin behaves not as “digital gold” but as a high-beta risk asset.

In fact, last week’s correlation analysis showed that Bitcoin’s price movements were almost perfectly correlated with those of IGV, highlighting that cryptocurrencies are now inseparable from the tech sector. This structure also overlaps with concerns that AI could lead the market into a large-scale negative credit event similar to the 2008 financial crisis.

Private Equity Crisis Spills Over into Cryptocurrencies

Market sentiment is further deteriorating due to the sharp declines in private equity firms. Owl Capital dropped 3.5% just on Monday and has fallen 32% since the start of the year. Blackstone, Ares Management, and Apollo Global Management have also recorded significant declines of 6-8%.

These PE firms have substantial exposure to the software sector, and the correlation between these sectors is fueling anxiety across the entire crypto market. Concerns over liquidity drying up and selective selling of speculative assets are creating a structural downward pressure on Bitcoin and other cryptocurrencies.

Regulatory Uncertainty Dampens Market Sentiment

Another factor behind the sell-off in risk assets is the recent Supreme Court decision that curbed the precedent of broad tariffs imposed by President Trump, creating global uncertainty around tariffs. This geopolitical uncertainty has cooled investor sentiment and led to capital outflows from all speculative assets, including cryptocurrencies.

Market Outlook: Range-Bound Trading Between $60K and $70K

While Bitcoin has remained above its worst lows from early February, risk appetite remains fragile, and price movements are expected to stay within a narrow range of $60,000 to $70,000. The current BTC price zone suggests a turning point in how the market evaluates cryptocurrencies, and without resolution of AI concerns and stabilization in the private equity sector, high-beta assets are likely to continue experiencing volatility.