The U.S. stock market opened the week in negative territory, dragging down risk assets and putting pressure on the cryptocurrency sector. The S&P 500 fell 0.5%, the Nasdaq Composite dropped 0.7%, and the Dow Jones Industrial Average lost 188 points (0.4%). The sell-off was particularly pronounced in the software sector, with the iShares Expanded Tech-Software Sector ETF (IGV) plunging 3% and now sitting 30% below its October high.
Bitcoin (BTC) initially held steady around $67,213 but later slipped below the $67,000 mark, breaking out of its tight weekend trading range of $68,000-$70,000. Analysts noted a growing correlation between Bitcoin and the troubled software stock sector, with the narrative emerging that if artificial intelligence (AI) is seen as a threat to software business models, it could also be perceived as a threat to Bitcoin, which is fundamentally software-based.
The weakness extended beyond Bitcoin. Crypto-related equities gave back part of their gains from the previous Friday. MicroStrategy (MSTR), the largest corporate Bitcoin holder, fell around 5%, as did Circle (CRCL), the issuer of the USDC stablecoin. Major Bitcoin miners, including Riot Platforms (RIOT), Marathon Digital (MARA), CleanSpark (CLSK), Cipher Mining (CIFR), and TeraWulf (WULF), all declined roughly 4-5%.
Paul Howard, senior director at trading firm Wincent, commented on the market's direction, stating, "Macro news has been closely correlated with crypto's risk profile the last 12 months and expectations are that macro numbers remain soft, implying a risk-off trade mentality." He pointed to an upcoming U.S. Supreme Court ruling on tariffs as a potential near-term catalyst more significant than routine economic data. Howard expects further consolidation as the crypto market searches for a new, compelling narrative to attract capital away from AI stocks and commodities, noting, "Crypto has some work to do recreating itself as an appealing asset class."
