Bitcoin slides 13% as AI rally pulls capital from crypto markets

Bitcoin fell 13% over recent weeks, widening the divergence with traditional equities as the AI-driven S&P 500 rallied 4% to fresh highs, according to CoinGecko data as of June 1.

The divergence reflects a rotation of capital from crypto into AI-exposed equities, according to data from CoinGecko and Morningstar. Intel Corp. has surged over 220% in 2026 alone as demand for server central processing units tied to agentic AI systems exploded, drawing institutional inflows that might otherwise target Bitcoin as a macro hedge.

The top cryptocurrency trades 41% below its all-time high from October last year, while the S&P 500 has gained 13% over the same period. Gold slipped 5% during recent weeks, suggesting a broad rotation out of alternative assets. The Bloomberg Dollar Spot Index advanced last month as haven demand and AI enthusiasm boosted the greenback, further pressuring risk assets including crypto.

Bitcoin's 13% decline comes more than halfway through the current four-year cycle following the April 2024 halving. During the prior three cycles, the coin's price has been in a bear market at this point after the halving, according to historical data. The previous major drawdown saw Bitcoin fall 76% from November 2021 to November 2022 before rebounding 154% in 2023 and 119% in 2024.

Capital Rotation Accelerates

Selling pressure has also weighed on Bitcoin. Traders were forced to liquidate positions after President Trump's tariff announcements in October, while long-term holders captured profits. Open interest across major exchanges has declined, with funding rates turning negative on Binance and OKX as of late May, indicating bearish positioning among leveraged traders, according to Coinglass data.

The AI infrastructure buildout has become the dominant investment theme of 2026. Morningstar senior equity analyst Brian Colello said the server CPU market is experiencing explosive demand from agentic AI systems, with AMD recently doubling its market size estimate to $120 billion from $60 billion. That capital has largely bypassed crypto markets.

Historical Patterns Favor Patience

Despite the drawdown, Bitcoin's fundamentals remain intact. The network's hash rate is close to all-time highs, its hard supply cap of 21 million coins is unchanged, and innovation continues across the broader Bitcoin ecosystem, including layer-2 scaling solutions.

Bitcoin has soared over 13,700% in the past 10 years, and each prior cycle has seen the cryptocurrency recover to reach new all-time highs. The current bear market phase mirrors patterns observed after previous halving events. If history repeats, the next cyclical upswing would begin in late 2026 or early 2027.

Key support sits at $60,000, a level that held during the March 2025 selloff. A break below that could open the door to $52,000, while resistance stands at $72,000 and then $80,000, according to technical analysis.

This article is for informational purposes only and does not constitute investment advice.