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Bitcoin, the largest cryptocurrency, has plunged in tandem with Nvidia (NVDA) and other AI-related stocks.
As noted by Michael Santoli, CNBC's senior markets commentator, Bitcoin's performance undermines the popular store of value narrative that frequently gets pushed by the proponents of the leading cryptocurrency.
According to Santoli, Bitcoin has been trading as "the next big thing" along with AI stocks since mid-2023.
As reported by U.Today, Bitcoin reached a negative correlation with stocks in April, which made it a viable portfolio diversifier. However, the cryptocurrency is now selling off once again together with other risk assets due to concerns about stagflation that could prompt the US Federal Reserve to postpone crucial rate cuts. The Fed might refrain from cutting rates this year, which would be a bearish scenario for crypto.
Is Bitcoin already in the bear market?
After logging its biggest monthly drop since August 2023, Bitcoin kicked off May with another substantial price decline.
The flagship cryptocurrency is currently trading at $57,904 on major spot exchanges after previously plunging to $56,637.
Cryptocurrency naysayer Peter Schiff recently opined that Bitcoin is "definitely" in a bear market despite the hype surrounding Bitcoin ETFs. "Turn out the lights #HOLDers, the party is over," he posted on the X social media network.
Meanwhile, Bitcoin ETFs are seeing record discounts, according to Bloomberg. For instance, BlackRock's IBIT closed 1.7% below its net asset value on Apr. 30.
The largest cryptocurrency is still up roughly 36% on a year-to-date basis.
Arman Shirinyan
