Bitcoin extended its decline on Wednesday, moving further away from the record-setting trajectory of technology stocks. The market sentiment was jolted after a major holder, known for its significant cryptocurrency hoard, executed a minor sell-off.
The world's largest cryptocurrency fell as much as 3.1% to $65,391 in Singapore, erasing roughly $160 billion in market value this week. The downturn began earlier in the week following the sale of approximately $2.5 million worth of Bitcoin by the firm, which holds a reserve exceeding $60 billion in the digital asset.
Rajiv Sawhney, Head of International Portfolio Management at Wave Digital Assets, noted that while the sale was negligible by any financial metric—selling just 32 units from a reserve of 843,706—it shook market confidence in the long-held "never sell" stance of the company's chairman, Michael Saylor.
"Selling 32 bitcoins for $2.5 million is nothing, it's a rounding error compared to their $62 billion bitcoin holding," Sawhney said. "But given bitcoin's poor performance in recent weeks, the signal this action sends to the market is what's more important."
Bitcoin's weakness stands in stark contrast to the recent surge in equities. The Nasdaq 100 Index hit a record high on Tuesday, underscoring the growing divergence between the cryptocurrency and tech stocks. Once viewed by many investors as a high-beta alternative to tech shares, this correlation has weakened since the market downturn in October last year.
The asset rotation is particularly pronounced as artificial intelligence stocks continue to attract capital. Over the past 12 months, the Nasdaq 100 has gained 41.5%, while Bitcoin has fallen 37% and currently trades 48% below last year's peak.
"We have been moving some funds out of bitcoin and digital assets into AI stocks," said Carney Mak, a partner at FXHB Asset Management. "The risk-reward profile for AI is currently more attractive than for digital assets, prompting some investors to adjust their portfolio allocations."
Mak noted that cryptocurrencies currently lack strong short-term catalysts, are increasingly trading in a range, and remain dependent on liquidity and the macro environment. He also pointed out that some planned crypto-related IPOs have been delayed, while AI companies continue to enjoy unabated investor enthusiasm.
In a related move, Nasdaq-listed K Wave Media announced last month it was abandoning a plan to purchase about $500 million worth of Bitcoin, opting instead to deploy the majority of those funds into AI data centers, GPU infrastructure, and related acquisitions. Meanwhile, cryptocurrency miner Bitdeer has liquidated its entire Bitcoin reserve to raise capital for expansion into AI and high-performance computing.