Why Bitcoin is Falling Despite US Stocks Hitting Record Highs

Bitcoin's value has been declining despite major US stock indices reaching new record highs. This unexpected turn of events has raised questions about why cryptocurrency is not following the trend of traditional assets. While Wall Street has seen a surge, reaching fresh peaks due to reduced inflation expectations and decreasing hopes for a September Federal Reserve rate hike, Bitcoin has struggled to keep pace.

On the week, Bitcoin dropped from around $65,000 to $62,470, while the tech-focused Nasdaq 100 only rose about 1%. Experts attribute Bitcoin's poor performance to several factors, including structural headwinds like weak demand and ongoing outflows from Bitcoin-related ETFs. Furthermore, the Senate's failure to advance the CLARITY Act and the SEC's cancellation of a meeting on new fundraising rules for crypto companies have contributed to the bearish sentiment.

Additionally, capital investment in artificial intelligence (AI) technologies has diverted resources away from Bitcoin, as companies such as Alphabet, Meta, and SpaceX invest heavily in AI infrastructure. This competition for speculative and institutional capital is believed to be a significant reason behind Bitcoin's falling prices.

Technical analysis also indicates a bearish trend for Bitcoin, with the cryptocurrency already in a bear flag break and a smaller bear pennant pattern forming around $60,000-$65,000. If the price breaks below the pennant's support, the broader downside target could reach approximately $46,000-$51,000.