- Bitcoin, the largest cryptocurrency, experiences a significant plunge, mirroring the performance of Nvidia and other AI-related stocks.
- Bitcoin’s current performance undermines the popular narrative of it being a reliable store of value.
- Concerns about stagflation and the potential delay of crucial rate cuts by the US Federal Reserve are contributing to the sell-off of Bitcoin and other risk assets.
Bitcoin’s recent plunge alongside Nvidia and other AI-related stocks raises questions about its viability as a store of value, amidst concerns about stagflation and potential Federal Reserve actions.
Bitcoin and AI Stocks: A Synchronized Plunge
As noted by Michael Santoli, CNBC’s senior markets commentator, Bitcoin’s performance undermines the popular store of value narrative that frequently gets pushed by the proponents of the leading cryptocurrency. Bitcoin has been trading as “the next big thing” along with AI stocks since mid-2023. However, the cryptocurrency is now selling off once again together with other risk assets due to concerns about stagflation that could prompt the US Federal Reserve to postpone crucial rate cuts. The Fed might refrain from cutting rates this year, which would be a bearish scenario for crypto.
Is Bitcoin Entering a Bear Market?
After logging its biggest monthly drop since August 2023, Bitcoin kicked off May with another substantial price decline. The flagship cryptocurrency is currently trading at $57,904 on major spot exchanges after previously plunging to $56,637. Cryptocurrency naysayer Peter Schiff recently opined that Bitcoin is “definitely” in a bear market despite the hype surrounding Bitcoin ETFs. “Turn out the lights #HOLDers, the party is over,” he posted on the X social media network. Meanwhile, Bitcoin ETFs are seeing record discounts, according to Bloomberg. For instance, BlackRock’s IBIT closed 1.7% below its net asset value on Apr. 30. The largest cryptocurrency is still up roughly 36% on a year-to-date basis.
Conclusion
Bitcoin’s recent performance, mirroring the plunge of Nvidia and other AI-related stocks, raises questions about its long-term viability as a store of value. With concerns about stagflation and potential Federal Reserve actions contributing to the sell-off of Bitcoin and other risk assets, investors and market watchers will be keeping a close eye on the cryptocurrency’s performance in the coming months.
