Why is Bitcoin falling as US stocks reach record highs?

Bitcoin has fallen below 70k after dropping almost 10% over the past week as heavy institutional selling, rising macroeconomic uncertainty, and a capital rotation into AI stocks have weighed on the cryptocurrency. 

The world's largest cryptocurrency is falling towards 69k, a level last seen in early April. Major altcoins are also under pressure, with the total crypto market capitalisation down 3.4% to $2.38 trillion. At the same time, the Crypto Fear & Greed Index has dropped to 29, firmly in fear territory, falling from neutral just a week ago. 

Bitcoin's weakness comes as US stocks trade around fresh record highs. The S&P 500 posted 11 record highs in May, driven by optimism surrounding AI, insatiable demand for chip stocks and resilient earnings. 

Bitcoin often benefits when investors embrace risk. This time, however, crypto is being left behind. 

Huge ETF outflows pressure BTC price 

A major reason is the sharp reversal in institutional flows. According to SoSoValue data, Bitcoin ETFs recorded $2.43 billion in net outflows in May, snapping a two-month run of inflows and marking the third-largest monthly outflow since spot ETFs launched in January 2024. 

Given that spot ETFs have become a large source of liquidity for Bitcoin, these outflows matter. The institutional demand that helped drive Bitcoin's recovery in recent months has shifted into reverse, removing a key source of buying support and leaving prices vulnerable to further downside. 

Geopolitical risks remain 

Renewed uncertainty surrounding peace talks in the Middle East is also unnerving investors. Mixed messages from the US and Tehran raise questions over whether a deal to reopen the Strait can be achieved soon. Oil prices jumped 4% yesterday, lifting inflation fears as the market also assesses the outlook for interest rates. 

US Treasury yields remain elevated, while the Fed is widely expected to keep rates higher for longer. This creates a more challenging backdrop for assets that depend heavily on liquidity and investor risk appetite, such as cryptocurrencies. 

BTC and Nasdaq 30-day correlation turns negative 

Despite these headwinds, US stocks continue to grind higher as investors appear willing to look through macro risks in favour of the AI growth story. Crypto, meanwhile, is falling sharply, suggesting investors are rotating capital away from crypto and into stocks amid the ongoing AI and semiconductor rally. 

The divergence is becoming increasingly clear. Bitcoin's 30-day correlation with the tech-heavy Nasdaq has fallen to -0.65, compared with a positive correlation of around 0.9 in April. In other words, Bitcoin is no longer trading alongside technology stocks and is instead trading inversely. 

Bitcoin technical analysis 

Bitcoin faced rejection at the 200 SMA, then rebounded lower and broke below the 50 SMA and the lower band of the ascending channel. This, combined with the break below 70k, keeps sellers hopeful of further downside. 

Sellers will look towards 65k (the April low) and then 60k (the 2026 low).  

Any recovery would need to see buyers rise above 70k and into the ascending channel at 72.6k. Above here, the 50 SMA at 77k comes into play ahead of the 200 SMA at 79k. It would take a rise above the May high of 82.5k to create a higher high and put bulls firmly in control.