empty
02.06.2023 04:31 PM
Bitcoin loses out to artificial intelligence

What is Bitcoin? A risky asset that sensitively reacts to rumors of a pause in the Federal Reserve's rate hikes and an improvement in global risk appetite? But then, why does BTC/USD remain indifferent to the rally in the Nasdaq Composite? Or is it a safe haven asset that could demonstrate phenomenal results in the event of a default in the U.S.? Then how do we explain the token's surge in response to news of a debt ceiling agreement? To effectively trade any asset, it is necessary to understand its nature. And with the leader of the cryptocurrency sector, it is not easy to do so.

In theory, Bitcoin could even be considered a commodity. Indeed, the token's supply is growing rapidly due to decreasing electricity prices and the emergence of new supercomputers. At the same time, demand is declining amid increased regulatory scrutiny and various scandals in the crypto industry. Trust is earned over years and can be easily lost. Fraud in the sector, blockchain issues, the crash of FTX and Terra Luna make investors think thrice before investing in cryptocurrencies.

To restore trust, a leap in development or an increase in volatility is needed to attract speculators. Unfortunately, Bitcoin cannot boast of this at the moment. The 30-day volatility of its quotes has dropped to the lowest levels since the beginning of the year. The decline in speculative interest in cryptocurrency became one of the factors contributing to its nearly 8% drop in May. The closing of BTC/USD in the red zone marked the first time in the last five months.

Monthly dynamics of Bitcoin

This image is no longer relevant

The decline in Bitcoin demand is due not only to a decrease in trust and volatility but also to capital outflows to other markets. Primarily, this refers to U.S. technology company stocks. The hype surrounding artificial intelligence has propelled the Nasdaq Composite by over 25% since the beginning of the year. The stock index has gained almost 9% in the last month, significantly outperforming the leader of the cryptocurrency sector.

It is not surprising that the correlation between BTC/USD and the U.S. stock market continues to decline. Investors are willing to invest in the Nasdaq Composite even in the event of a recession in the American economy, especially since the Federal Reserve intends to pause its tightening monetary policy. This is good news for stock indices.

Dynamics of Bitcoin and Nasdaq Correlation

This image is no longer relevant

This image is no longer relevant

Bitcoin faced some pressure from inflated expectations. Investors considered the token the best investment option in the event of a U.S. default, second only to gold. The agreement to suspend the debt ceiling until 2025, with subsequent ratification in Congress, deprived BTC/USD of the opportunity to showcase its best qualities.

Technically, on the daily chart of Bitcoin, there was an unsuccessful attempt by the bulls to attack with the aim of restoring the upward trend. I don't think that token enthusiasts will give up because of it, especially since the Wolfe Wave and Double Bottom patterns are joined by the 1-2-3 pattern. Breaking through the resistance at 27,630 will provide a basis for buying BTC/USD.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Middle East Crisis as a Prelude to Global War... (Limited Downside Possible for Bitcoin and EUR/USD)

The missile standoff between the U.S. proxy Israel and Iran continues. Yesterday's unexpected departure of the U.S. president from the G7 summit in Canada sparked speculation that America might engage

Pati Gani 09:04 2025-06-17 UTC+2

What to Pay Attention to on June 17? A Breakdown of Fundamental Events for Beginners

Only a few macroeconomic reports are scheduled for Tuesday, and none are significant. In the Eurozone, we'll see entirely secondary economic sentiment indexes from the ZEW Institute

Paolo Greco 06:38 2025-06-17 UTC+2

GBP/USD Overview – June 17: Fed and BoE Meetings as a Reason to Sell the Dollar

On Monday, the GBP/USD currency pair also traded relatively calmly, with a bullish bias. The British pound doesn't reach new three-year highs every day, but looking at almost any higher

Paolo Greco 03:49 2025-06-17 UTC+2

EUR/USD Overview – June 17: Safe-Haven Status No Longer Works

The EUR/USD currency pair traded relatively calmly on Monday, although we expected higher volatility. This is because the last events that traders could react to were from Friday

Paolo Greco 03:49 2025-06-17 UTC+2

Trump Wants to "Pass the Ball" to Europe

Last week, it became known that Donald Trump is seriously considering raising trade tariffs for all countries currently engaged in negotiations with the U.S. Trump is frustrated by the slow

Chin Zhao 00:39 2025-06-17 UTC+2

The Dollar Walks on Thin Ice

When there's money, you buy the best. In past years, the US dollar and dollar-denominated assets—especially shares of the "Magnificent Seven"—were considered the best investments. American stock indices

Marek Petkovich 00:39 2025-06-17 UTC+2

USD/JPY. June Meeting of the Bank of Japan: A Preview

On Tuesday, June 17, the Bank of Japan will announce the results of its next policy meeting. According to preliminary forecasts, the central bank is expected to leave all monetary

Irina Manzenko 00:39 2025-06-17 UTC+2

The Pound Ignores Weak Data and Persistently Tries to Continue Rising

The macroeconomic data from the UK published last week looks frankly weak—everything is in the red zone, meaning worse than expected. Nevertheless, the pound continues to climb upward regardless

Kuvat Raharjo 19:36 2025-06-16 UTC+2

CFTC Report: The Dollar Is Being Sold Off Again. Awaiting New Revelations from Trump

Five weeks ago, the total short position on the U.S. dollar against major currencies stopped increasing, which gave reason to believe the dollar might begin an offensive in the currency

Kuvat Raharjo 12:14 2025-06-16 UTC+2

GBP/USD. Analysis and Forecast

Today, the GBP/USD pair is attempting to regain positive momentum while remaining on the defensive. Traders prefer to wait for the release of key data before opening directional positions

Irina Yanina 12:10 2025-06-16 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.