Key takeaways:
- Skyrocketing oil prices and rising producer inflation have forced traders to price in tighter Fed monetary policy.
- Massive outflows of spot Bitcoin ETFs in June show that the cryptocurrency currently does not serve as an exchange hedge.
The Nasdaq 100 index fell 7.5% in the seven days to June 10, shedding $2.7 trillion in market value. The decline represents more than double the market capitalization of Bitcoin (BTC) and has put traders on alert, especially as inflation data feels the heat from high oil prices. Traders now fear that Bitcoin’s support near $60,000 is at risk.
Nasdaq 100 Futures (left) vs. Bitcoin/USD (right). Source: TradingView
The ongoing war in Iran has pushed Brent crude oil prices above $90, leaving investors fearing an economic slowdown and pricing in tighter monetary policy for longer than previously expected. Regardless of labor market conditions, the amount of money available for consumption tends to decline.
The US Department of Labor reported on Thursday that the Producer Price Index rose 6.5% from May 2025, the highest level since 2022. Investors now expect a 40% chance of the US Fed raising interest rates by September, up from 5% a month earlier, according to CME FedWatch tool.
2 Month Bitcoin Futures, 1 Year Base Rate. Source: Lightness
On Thursday, Bitcoin futures were trading below a neutral premium of 4% compared to regular spot markets, indicating low demand for bullish leverage. Meanwhile, SpaceX’s (SPCX US) upcoming $75 billion IPO has been more than doubled oversubscribed, signaling that investors are not yet ready to give up hope for the tech sector’s continued growth.
AI infrastructure companies are desperate for cash to expand, which partly explains the negative market reaction. Google (GOOG US) announced plans to raise $80 billion, and Oracle (ORCL US) and Super Micro Computer (SMCI US) followed suit with $40 billion and $7 billion, respectively. SpaceX’s Friday stock debut will likely set the tone for its upcoming IPO.
Selected stock performance of the AI sector. Source: TradingView and Cointelegraph
It seems premature to label the AI sector a bubble after SpaceX announced the largest public offering in history at a valuation of $1.77 trillion. Moreover, the US stock market reacted positively after US President Donald Trump canceled planned attacks on Iran, citing the resumption of negotiations on the reopening of the Strait of Hormuz.
Suspension of strategy accumulation in the face of spot Bitcoin ETF outflows
The decline in Bitcoin’s value coincided with Strategy’s (MSTR US) decision to temporarily halt Bitcoin accumulation in order to reduce convertible debt. As a result, Strategy’s cash position has fallen to seven months of ex-dividend coverage, while Stretch’s preferred stock (STRC US) has distanced itself from the $100 level that would allow further stock issuance.
Daily net flows of US-listed ETFs, USD. Source: SoSoValue
The outflow of $1.9 billion from Bitcoin Exchange spot funds in June reinforced bearish sentiment as the index serves as a proxy for institutional demand. Currently, Bitcoin can hardly be considered a hedge against a possible stock market sell-off; a further correction below $60,000 should not be ruled out.
