Bitcoin falls to $59,000 – lowest level since October 2024

Fed Policy and Iran Tensions as Burdens

Wall Street was headed for a three-day losing streak, with the S&P 500 and the tech-heavy Nasdaq Composite declining on Wednesday. In Asia as well, chip stocks such as Samsung Electronics and SK Hynix lost ground. Instead, Bitcoin behaved more like another risky, high-volatility asset that comes under pressure in difficult market phases, much like equities. But institutional players have also recently struggled with Bitcoin. Contrary to hopes, the cryptocurrency has not been able to reliably hedge the portfolios that had been shaken by the Iran war and the associated fears of isolation.

Adding to the burden on Bitcoin and other cryptocurrencies such as Ethereum, BNB, and XRP has been waning interest from retail investors. Some have withdrawn from the market and shifted their funds toward stocks in the field of artificial intelligence (AI). Above all, retail investors are pulling capital out of cryptocurrencies and betting instead on the volatility surrounding AI stocks and major IPOs. With OpenAI and Anthropic, further heavyweights from the AI sector are expected. Indeed, US capital markets are currently processing the largest IPO ever – that of SpaceX, which was listed on the Nasdaq earlier this month.

Retail Investors Flee to AI Stocks

On several recent trading days, investors withdrew net funds – on one day around $113.8 million, with BlackRock's IBIT recording the largest outflows at approximately $182 million. On June 23, the picture reversed for the first time: the products recorded net inflows of around $39.2 million, led by ARK 21Shares' ARKB. On-chain data also show that around half of all Bitcoin holdings are currently at a loss.

Despite the collapse, some market participants are clinging to positive expectations. Geoffrey Kendrick, Head of Digital Assets Research at Standard Chartered, sees this level as the definitive cycle bottom and is sticking to a year-end target of $100,000 – which would represent around 70 percent upside potential. He attaches three conditions to this: returning ETF inflows, new corporate purchases, and falling oil prices as a result of easing geopolitical tensions.

Standard Chartered's Strategy Sees Cycle Bottom

At the same time, however, Strategy this week bought back 520 BTC for around $35 million, and Strive Asset Management also stepped in with 759 BTC at an average price of around $65,850. Strategy's stock, however, recently fell to a two-year low. The fact that the company sold 32 BTC between May 26 and 31 was viewed by the market as an unsettling signal.

Added to this are political uncertainties in the United States: the so-called Clarity Act – a key US law for regulating digital assets – is stuck in the Senate. Banks are putting up resistance, and a bipartisan majority is not yet in sight. Without clear rules, institutional investors continue to find it difficult to build larger positions.

Political Uncertainty: Clarity Act Blocked in the Senate

Market observers view the situation critically with regard to the coming weeks. Market expert Timo Emden of Emden Research wrote that Bitcoin investors are currently on thin ice. The recent recovery movement could turn out to be a brief flicker in a still-dominant downtrend. Market participants should prepare for further downside risks. The potentially ongoing identity crisis is unlikely to convince potential buyers who could sustain a lasting upward movement.

The overall mood also remains tense. Gerry O'Shea, Head of Global Market Insights at crypto asset manager Hashdex, said sentiment remains weak because prominent IPOs and AI stocks are drawing attention to themselves. Once again, according to Emden, investors are asking themselves what role Bitcoin should play in a market environment increasingly shaped by AI, technology stocks, and macroeconomic factors. Bitcoin and Solana are down around 32 and 47 percent respectively so far this year.