Bitcoin Sinks Toward $60,000 as Investors Pivot to AI and Fed Tightens Grip

Investors Flee Crypto for AI Bets

Bitcoin (BTC) tumbled to the $60,000 zone on Wednesday, marking its second visit to this level in June 2024. The drop coincided with a clear shift in investor appetite, as capital flowed out of crypto and into high-flying technology sectors. At midday, bitcoin was down 3.2%, while the Nasdaq posted a 0.8% gain, highlighting the divergence between digital assets and equities linked to artificial intelligence.

SK Hynix’s filing for a nearly $30 billion U.S. share offering underscored the scale of capital chasing AI-related opportunities. If successful, this would be the largest overseas capital raise since Saudi Aramco’s $26 billion listing in 2019. On paper, crypto’s promise of decentralization remains; but for now, investor focus has clearly shifted elsewhere.

Combined exchange volumes in May 2024 dropped to $4.41 trillion, the lowest since September last year.

Rainbow Chart Flashes "BTC Is Dead"

For only the second time since its creation in 2014, Bitcoin has slipped beneath the lowest band of the so-called Rainbow Chart—a long-term valuation model that maps BTC price cycles using colored sentiment bands.

With BTC trading near $62,500—roughly 50% below its October 2025 peak of $126,000—the decline pushed prices into the Rainbow Chart’s infamous “Bitcoin Is Dead” zone. The last occurrence was in 2022 when bitcoin hit cycle lows at $15,000 before rebounding months later. This breach has left traders debating whether the model still holds predictive power or if market dynamics have fundamentally shifted.

It’s unclear whether this breach signals capitulation or simply reflects shifting macro tides.

Gold, Oil, Bitcoin All Slide Together

Wednesday’s selloff was not limited to crypto: gold fell below $4,000 per ounce—down 28% from its January 2025 high of $5,600—while oil sank under $70 per barrel. Silver mirrored these declines, losing over half its value to trade under $59 per ounce. This broad retreat suggests risk aversion is not unique to digital assets but part of a wider market reset tied to monetary policy fears.

The new Federal Reserve Chair Kevin Warsh has taken a hawkish stance, with markets now pricing in two rate hikes by March 2027 that could push benchmark rates up to 4.25%. As a result, assets often seen as hedges against currency debasement—including bitcoin and precious metals—have faced sustained selling pressure.

Despite bitcoin’s recent losses against the dollar, it has still gained about 30% versus gold and more than 55% against silver since February. This relative strength hasn’t prevented nervousness among investors who see tightening liquidity and rising rates as reasons to pare back exposure to speculative assets.

Exchange Volumes Hit Nine-Month Lows

Trading activity across maojr crypto exchanges declined sharply in May 2024. Combined spot and derivatives volumes fell by 3.45% month-over-month to $4.41 trillion—the lowest total since September of last year. This contraction points to waning retail and institutional participation amid uncertain macro conditions.

In contrast, perpetual futures linked to real-world assets (RWA) bucked the trend with a 10.4% surge to new all-time highs in volume during May. The data highlights a bifurcation within digital asset markets: while mainstream crypto trading cools off, niche segments like RWA derivatives are attracting fresh interest.

Monetary Policy Jitters Rattle Markets

10x Research founder Markus Thielen believes bitcoin could fall further before finding support. He cites three indicators—global liquidity trends, macroeconomic calendar events, and seasonal patterns—that all point toward late August or even October as potential inflection points for BTC prices. One model tracking global liquidity suggests late August may be critical for establishing a bottom.

Thielen expects BTC could break below $60,000 and reach as low as $55,000 before stabilizing—a level not seen since early spring. His outlook is shaped by recent dollar strength and speculation that the Fed may opt for another rate hike rather than a cut in coming quarters.

According to coindesk.com, bitcoin is now trading below its long-term 200 week moving average of roughly $62,800—a technical threshold watched closely by long-term holders seeking signs of trend reversals or deeper corrections ahead.

Next milestones

If bitcoin breaks below the $60,000 threshold and approaches the $55,000 level identified by 10x Research as a potential cycle low, immediate attention will turn to whether this area attracts buying support or triggers further liquidations; confirmation of a bottom remains unclear until at least late August, when global liquidity trends are expected to signal the next key inflection point according to Markus Thielen.