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US Stocks Climb on AI Boom as Bitcoin Weakness Deepens

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US Stocks Climb on AI Boom as Bitcoin Weakness Deepens

US equities rebounded as the S&P 500 climbed to $6,976, before correcting. Earlier in the week, the benchmark index closed just shy of its prior record before briefly moving higher in subsequent trading, while risk appetite in equities contrasted sharply with continued weakness across crypto markets.

At the same time, Bitcoin continued to underperform, with selling pressure accelerating as broader capital flows favored traditional risk assets. The divergence has become more pronounced in recent sessions, reinforcing the growing split between equity and crypto sentiment.

S&P 500 Year-to-Date Chart

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AI Stocks and Small Caps Drive Equity Momentum

The latest leg higher in the S&P 500 was led by large-cap technology and semiconductor stocks, as investors rotated back into AI-linked names after a brief pause driven by valuation concerns. 

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Alphabet rose to a new record, Amazon advanced ahead of earnings, and chipmakers posted broad-based gains as demand expectations firmed.

Beneath the surface, market breadth also improved. Small-cap stocks outpaced megacaps, with the Russell 2000 gaining around 3% year-to-date. 

That relative strength is often interpreted as a signal of confidence in domestic growth and has added support to broader stock market predictions that point to continued upside as long as earnings momentum holds.

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Earnings, Not Valuations, Now Anchor the Rally

Corporate results remain the central driver of the market’s advance. Analysts now expect S&P 500 companies to deliver close to 11% earnings growth for the December quarter, up sharply from estimates earlier in January. 

More than 80% of reporting firms have exceeded expectations so far, according to FactSet data cited by market strategists.

Recent research suggests earnings growth has accounted for roughly 84% of total S&P 500 returns in the current cycle, marking a shift away from multiple expansion as the primary engine of gains. This transition has softened concerns around an AI-driven bubble, as profits and cash flow increasingly justify higher prices.

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Macro Backdrop Keeps Risk Appetite Intact

The broader macro environment has so far supported equity risk-taking. US GDP growth remains near 3.3%, inflation trends are relatively contained, and productivity indicators have improved. Even political disruptions, including a federal government shutdown that delayed key data releases, failed to dent market confidence materially.

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Major US indices posted solid gains alongside the S&P 500, with the Dow Jones Industrial Average rising more than 1% YTD. But the Nasdaq Composite dropped roughly 2.6%. 

Dow Jones Year-To-Date Chart

Investors now look ahead to upcoming economic data and the Federal Reserve’s next policy signals for confirmation that financial conditions will remain supportive.

Bitcoin Weakness Highlights Cross-Market Divergence

While equities pushed higher, crypto markets moved in the opposite direction. Bitcoin price dropped below $65,000, marking its lowest level in roughly a year and extending a broader downtrend that has weighed on digital assets. 

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The decline has come amid fading momentum, reduced speculative appetite, and capital rotation toward equities offering visible earnings growth.

The contrasting performance reflects a growing divergence between traditional risk assets and crypto, at least in the near term. 

While both markets can benefit from liquidity-driven rallies, current conditions favor assets tied more directly to corporate profits.

Bitcoin 7-Day Price Chart. Source: Coincodex

Outlook

The S&P 500’s move to new highs reflects a rally increasingly grounded in earnings delivery rather than expanding valuations. AI investment, small-cap strength, and resilient macro data continue to support the upside case, even as record levels invite selective caution.

Bitcoin’s slide to a one-year low highlights where risk appetite is thinning, but for now, equity markets remain firmly in control of the broader risk narrative.

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Crypto World

Bitcoin Slips as Geopolitical Signals Shift Bitcoin Falls 1%

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Crypto Breaking News

Bitcoin Slips as Geopolitical Signals Shift

  • Bitcoin drops 1% as Trump signals faster end to US-Iran conflict timeline
  • BTC trades near $70,700 while volatility rises amid geopolitical shifts
  • Oil prices climb, offsetting crypto gains as tensions remain unresolved
  • Iran rejects ceasefire terms, adding pressure to global financial markets
  • Crypto derivatives show weakening momentum ahead of major options expiry

Bitcoin declined 1% during early Thursday trading, reflecting uncertainty from evolving geopolitical developments. The asset traded at $70,712, showing limited momentum within a narrow daily range. Meanwhile, traders reacted to reports of a potential shift in US foreign policy direction.

The US administration signaled an intention to shorten the ongoing conflict with Iran. This stance introduced mixed expectations across financial markets and increased short-term volatility. As a result, Bitcoin failed to sustain earlier gains despite recent bullish projections.

At the same time, trading volumes remained subdued, indicating weaker participation in the current market phase. Market activity reflected hesitation, especially as external risks continued to dominate sentiment. Consequently, Bitcoin moved sideways with a slight downward bias.

Oil Prices Rise as Conflict Dynamics Evolve

Oil prices moved higher as geopolitical tensions continued to influence supply expectations. The upward movement erased some gains previously seen in risk assets like cryptocurrencies. This shift highlighted the inverse reaction between commodities and digital assets.

Reports indicated that the US aimed to conclude the conflict within a defined timeframe. However, Iran rejected proposed ceasefire conditions and introduced its own demands. These developments prolonged uncertainty and supported oil price strength.

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Additionally, the proposed conditions included sanctions removal and expanded regional control measures. Such demands complicated negotiations and extended the timeline for resolution. Therefore, energy markets maintained upward pressure amid unresolved tensions.

Derivatives Market Signals Weakening Momentum

Bitcoin derivatives data showed declining open interest over recent hours, signaling reduced market conviction. This drop aligned with broader uncertainty across financial markets. As a result, traders adjusted positions ahead of key expiry events.

Options data indicated that over $16 billion in Bitcoin and Ethereum contracts approach expiration. This large volume created expectations of heightened volatility in the near term. Consequently, short-term price movements remained sensitive to external triggers.

Meanwhile, projections from institutional analysts suggested a potential long-term upside for Bitcoin. However, current market behavior reflected caution due to geopolitical risks. Therefore, near-term sentiment remained mixed despite optimistic forecasts.

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Background and Broader Context

The US administration aimed to balance foreign policy priorities with domestic agendas. Reports indicated a focus on upcoming elections and legislative initiatives. This shift influenced decisions related to the conflict timeline.

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At the same time, global markets responded quickly to any signals of escalation or de-escalation. Digital assets, commodities, and equities showed increased correlation during this period. As a result, geopolitical developments continued to shape market direction.

Overall, the situation remained fluid, with negotiations still uncertain and conditions unresolved. Market participants reacted to each update, causing frequent price adjustments. Consequently, volatility persisted across both traditional and digital asset classes.

Risk & affiliate notice: Crypto assets are volatile and capital is at risk. This article may contain affiliate links. Read full disclosure

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Bitcoin Stares Down Recession as BlackRock CEO Joins Oil Price Warnings

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Bitcoin Stares Down Recession as BlackRock CEO Joins Oil Price Warnings

Bitcoin (BTC) faces a new macro test as markets increasingly bet on the US entering recession in 2026.

Key points:

  • Bitcoin could face a new challenge in the form of its first recession after the COVID-19 crash.

  • US recession odds surge as BlackRock CEO Larry Fink warns over oil prices.

  • Bitcoin’s high correlation with “extremely oversold” stocks continues.

Moody’s puts 12-month recession odds near 50%

Data highlighted this week by Axel Adler Jr., a contributor to onchain analytics platform CryptoQuant, shows recession odds nearing 50%.

Bitcoin’s next bull run could come courtesy of a US economic downturn, and market participants see the latter as more and more likely this year.

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“Moody’s Analytics raised the probability of a U.S. recession over the next 12 months to 48.6%, while Goldman Sachs increased its estimate to 30%,” Adler noted on X.

Prediction traders agree, with US recession odds reaching 36% on Kalshi — the highest reading since September 2025.

US recession odds for 2026 (screenshot). Source: Kalshi

The US-Iran war and its impact on global oil prices lie at the heart of the surge. Recent claims by both sides about dialogue to end hostilities and fully reopen the Strait of Hormuz have caused confusion throughout risk-asset markets.

“That’s keeping upside pressure on oil prices, which is recently crossing a key threshold historically associated with recession,” trading resource Mosaic Asset Company commented in the latest edition of its regular newsletter, “The Market Mosaic.”

Mosaic said that oil jumping 50% above its long-term trend, a phenomenon now playing out, “has been seen before or during nearly every recession over the past 50 years.”

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“Oil prices are directly correlated to headline inflation, where a $10 increase per barrel can push inflation higher by 0.20% or more,” it added.

Oil price chart with recessions marked. Source: Mosaic Asset Company

Major players echo those concerns, including Larry Fink, CEO of the world’s largest asset manager, BlackRock.

“We’ll have a global recession,” he told the BBC this week about the consequences of Iran staying a “threat” to the global economy, even if the war itself ended.

Bitcoin stays tied to “extremely oversold” stocks

Bitcoin has had little experience of recession in its lifespan of less than 20 years.

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Related: Gold slides as traders eye sub-$50K BTC: Five things to know in Bitcoin this week

In 2020, a US recession from February to April preceded a period of major BTC price upside after BTC/USD initially joined risk assets in a global crash in March.

BTC/USD one-week chart. Source: Cointelegraph/TradingView

As Cointelegraph reported, Bitcoin’s correlation to US stocks has become stronger this year, potentially increasing the potential for a relief bounce.

“While the uncertainty over inflation and the outlook for monetary are broadly weighing across the market, conditions are very favorable to see at least a short-term rally unfold,” Mosaic commented. 

“Various measures of investor sentiment and positioning are pointing to excessive bearishness in the market while breadth metrics are extending to extremely oversold levels.”

S&P 500 chart. Source: Mosaic Asset Company