The world’s most prominent cryptocurrency is on track for its weakest showing at this stage of the year in more than ten years, as surging artificial intelligence investments and attractive new stock offerings including SpaceX draw money away from digital assets.
The digital currency’s value has dropped approximately 15% over the past week, marking its steepest decline since November 2022 when the FTX exchange collapsed. Currently trading near $63,000, the cryptocurrency has shed roughly one-third of its worth during 2026, representing its largest loss at this point in any year since 2015 at minimum, according to LSEG data.
The situation worsened when Michael Saylor’s Strategy, which holds more bitcoin than any other corporation, announced Monday it had offloaded some of its digital currency holdings for the first time since 2022.
“It is instructive to see how assets can struggle as they move from being the flavour of the month to being suddenly out of fashion,” RBC BlueBay Asset Management chief investment officer, fixed income, Mark Dowding said in a blog.
The changing environment for the cryptocurrency, which reached unprecedented peaks above $125,000 in late 2024, shows several key shifts.
PRICING PRESSURES MOUNT
The digital asset now trades roughly 40% below its level when U.S. President Donald Trump assumed office in January 2025, despite his pledge to establish America as the global cryptocurrency hub. Multiple appointments of crypto-supportive officials to important regulatory and financial positions had initially lifted market confidence.
However, increased participation by major institutional investors and banks, along with readily available exchange-traded products, has reduced the very characteristics that made the cryptocurrency attractive as a portfolio diversifier – namely its extreme price swings and independence from traditional asset movements.
The DVOL index from crypto options platform Deribit, which measures expected volatility in bitcoin options, currently sits around 47, its peak since early April but only slightly above a record low of approximately 31 reached in late May. From the index’s 2021 debut through roughly April of last year, it rarely dropped below 50.
Regarding correlation patterns, before 2020 the cryptocurrency showed no consistent relationship with the S&P 500. However, throughout most of the past six years, both have moved together. This connection has recently reversed dramatically, with AI-powered stock gains continuing while the digital currency stagnates.
RIVALRY WITHIN DIGITAL ASSETS
The era when bitcoin dominated the cryptocurrency landscape has ended. The digital asset space now features major competing currencies including ether, solana and BNB, plus smaller “alt-coins” that collectively represent one-fifth of the total market, CoinGecko reports.
Stablecoins, which maintain fixed values tied to traditional currencies like the U.S. dollar, have also eroded bitcoin’s market position.
CoinGecko data shows bitcoin now represents 56% of the cryptocurrency market, down from 63% twelve months ago. While ether and alternative coins have maintained relatively stable market shares, stablecoins now comprise nearly 13% of the market compared to roughly 7% a year earlier.
Daily trading volume in the leading stablecoin tether now exceeds the combined volume of bitcoin and ether, while trading in second-place USDC matches the volume of the next ten digital currencies combined, CoinGecko data indicates.
CAPITAL MIGRATION PATTERNS
Bitcoin faces competition not only from other digital currencies but from traditional investments seeking investor funds. When artificial intelligence began gaining momentum following ChatGPT’s late 2022 debut, bitcoin initially benefited from investment flows targeting technology-related assets.
AI now commands stock market attention, with capital flowing into companies building data centers, semiconductor manufacturers, chip producers and even copper wire suppliers.
Over the past year, U.S. semiconductor stocks have jumped 170% while bitcoin has declined 40%. The money entering AI-focused investments must originate from existing positions.
Investors are withdrawing funds from major bitcoin ETFs at unprecedented rates, with more than $2.7 billion in net withdrawals during the week ending Thursday, LSEG data reveals. Total net outflows for 2026 have reached $3.1 billion.
The four largest semiconductor ETFs – VanEck’s Semiconductor ETF, the Roundhill Memory ETF, State Street’s SPDR S&P Semiconductor ETF and iShares Semiconductor ETF – have attracted over $3 billion in June’s first week alone and an impressive $21 billion year-to-date.
