Last week, Bitcoin reached a new local low, falling below $60,000 for the first time since autumn 2024. Over the seven-day period, the largest cryptocurrency lost more than 13% of its value.

In the battle for liquidity, cryptocurrencies are losing ground to technology stocks that continue to rise amid the artificial intelligence boom, while the upcoming SpaceX IPO has triggered an additional outflow of capital, News.Az reports, citing Kommersant.

Kommersant Investments reviews the factors behind the cryptocurrency market crash and what may lie ahead for the sector.

Everything is working against Bitcoin

Between June 1 and June 8, Bitcoin's price fell by 13.35% to $63,090.8, according to CoinDesk data. On Friday, June 5, the cryptocurrency briefly dropped below $60,000, reaching its lowest level since October 2024.

The decline resulted from a combination of factors, with geopolitics playing the key role, according to Alexander Shneiderman, Head of Client Support and Sales at Alfa-Forex. Iran suspended negotiations with the United States following Israeli strikes on Lebanon, the Strait of Hormuz remains blocked, and oil prices have risen above $95 per barrel.

“This triggered a global risk-off environment, with investors rushing into the U.S. dollar and bonds while pulling money out of riskier assets,” he explained.

Another factor was U.S. macroeconomic data. The labor market report published on June 5 showed the creation of 172,000 non-farm jobs, significantly above the forecast of 85,000. According to Shneiderman, this “effectively buried hopes for a Federal Reserve rate cut.”

“Rate cuts have historically been the main catalyst for crypto market growth because cheap money seeks higher returns and flows into risk assets. As long as rates remain elevated, however, capital stays in bonds,” he said.

An additional trigger was the sale of 32 Bitcoins by Strategy, one of the world's largest corporate holders of the cryptocurrency, according to Alexander Kraiko, Lead Analyst at crypto brokerage Cifra Markets.

“The volume sold is insignificant for the company, so I do not see a financial rationale behind the transaction. However, the fact that one of Bitcoin’s most prominent supporters sold part of its holdings increased investor anxiety,” the analyst noted.

The sale represented just 0.0038% of Strategy’s total Bitcoin reserves and should be viewed more as a “symbolic move” within the company’s new strategy, which involves not only accumulating Bitcoin but also periodically selling part of its reserves, said Nikita Bredikhin, Lead Investment Analyst at Go Invest.

Money Is Moving Into Space

The broader cryptocurrency market shrank by nearly 15% over the past week, with the CoinDesk 20 Index — which tracks the performance of the 20 largest digital assets by market capitalization and liquidity — falling to 1,701 points. On Saturday, June 6, the benchmark dropped to 1,585.7 points, its lowest level since August 2024.

According to Alexander Kraiko, the cryptocurrency market is losing the competition for speculative capital to technology stocks.

“The main investment boom is currently concentrated in the artificial intelligence sector and among producers of computing infrastructure. A significant share of capital is flowing there. In my view, as long as this boom continues, cryptocurrencies will struggle to demonstrate strong growth,” the analyst said.

Investors are indeed “shifting capital from cryptocurrencies into companies linked to artificial intelligence because they expect higher returns there,” said Nikita Bredikhin.

According to him, many investors are also focusing on the upcoming IPO of the space company SpaceX, which could become the largest public offering in history. As a result, they are “freeing up liquidity to participate in the offering and selling other positions.”

Interest in the cryptocurrency market is also declining because of the high cost of mining.

“The cost of mining one Bitcoin is currently around $89,000, while its market price is close to $63,000. As a result, mining companies are forced to sell accumulated reserves to finance their operations. This is why many of these companies are shifting toward providing computing services for artificial intelligence,” Bredikhin explained.

What Comes Next

Under current conditions, the future direction of the cryptocurrency market could unfold under three different scenarios, according to Rufat Abyasov, Founder and Chief Investment Officer of GBIG Holdings.

In the base-case scenario, the market enters a sideways trading range of $58,000–68,000 and consolidates within that range for one to two months. The next major move will depend on Federal Reserve policy decisions and geopolitical developments.

If tensions in the Middle East ease and the Federal Reserve resumes cutting interest rates, inflows into Bitcoin ETFs could recover, potentially pushing Bitcoin back to $100,000 and above by the end of the year.

The negative scenario, however, assumes another break below the $60,000 level, followed by a decline toward the $50,000–55,000 range. This could lead to a prolonged crypto winter and a new local bottom closer to the autumn of this year.

“In this phase of the cycle, the most important thing for investors is not to catch falling knives and to reduce leverage as much as possible, since leverage is usually the main cause of automatic position liquidations,” Abyasov advises.

In his view, for long-term investors with an investment horizon of one to three years, current price levels “look objectively more attractive than last October’s peak, when Bitcoin traded at around $126,000.”

“Historically, situations where more than half of all coins are held at a loss have occurred more often near trend reversals than near market tops,” the analyst concluded.

News.Az 

By Faig Mahmudov