Bitcoin plunges 6.4% to $65,708 as AI rally draws capital from crypto

Bitcoin fell 6.4% to a 24-hour low of $65,708 during Asian trading Wednesday, extending a weeklong rout as capital rotated into AI-driven equities that pushed global stock benchmarks to fresh records.

The decline pushed Bitcoin to its lowest level since early April, with the selloff accelerating after the MSCI All Country World Index set a new all-time high on the AI rally. Ether broke below $1,900 for the first time since February, trading at $1,876 as of 04:30 UTC, according to CoinGecko data.

"Bitcoin is getting caught in a macro rotation trade — AI and tech equities are offering better risk-adjusted returns right now, and capital is following the momentum," Nina Volkov, crypto analyst at Edgen, said. "The ETF outflow streak shows institutional money is rotating out of crypto exposure and into the AI theme."

Spot Bitcoin ETFs have recorded net outflows for 11 consecutive sessions totaling roughly $3.45 billion, the longest redemption streak since the products launched in January 2024, according to SoSoValue data. A single session on Monday saw $484 million in withdrawals. The outflows coincide with a surge in AI and semiconductor stocks, with the Nasdaq 100 up 18% year-to-date.

The selloff was compounded by leveraged positioning. Crypto exchanges recorded $594 million in long liquidations over the past 24 hours, according to CoinGlass data, as traders betting on higher prices were forced to unwind positions. Open interest across Bitcoin futures fell 8% to $42 billion, with funding rates turning negative on Binance and OKX for the first time this month.

Capital Rotation Accelerates as AI Stocks Surge

The divergence between crypto and equities has widened sharply this week. While Bitcoin dropped below $66,000, the MSCI All Country World Index extended its record run, driven by gains in AI-related stocks. South Korea's Kospi, heavily weighted toward semiconductor makers, has surged 105% year-to-date, while Tencent jumped 7.5% in Hong Kong trading Wednesday.

The rotation echoes patterns seen in previous risk-on cycles where capital flows concentrated in the strongest-performing sector. AI and semiconductor stocks have absorbed inflows that might otherwise have flowed into crypto, analysts said. Brent crude held near $94.40 a barrel as U.S.-Iran tensions persisted, adding to the risk-off tone in crypto markets.

Strategy's Symbolic Sale Adds Pressure

The selloff was triggered Monday after Strategy, the largest corporate holder of Bitcoin, disclosed its first sale of the cryptocurrency in three and a half years. The company sold 32 Bitcoin for $2.5 million at an average price of $77,135 to fund preferred stock distributions — a symbolic move that nonetheless rattled a market already on edge.

Strategy still holds 843,706 Bitcoin purchased at an average price of $75,699, but the sale broke chairman Michael Saylor's long-standing "never sell" stance. MSTR shares fell more than 8% on Tuesday and extended losses Wednesday.

Bitcoin's next major support sits at $64,000, a level that has held since March. A break below that could open a path toward $60,000, according to technical analysts. Resistance stands at $70,000, which served as support before breaking down this week.

This article is for informational purposes only and does not constitute investment advice.