Despite a series of favorable influences, the steady outflow of capital from the cryptocurrency market, evident since mid-last year, shows no signs of abating. Recent data has uncovered an intriguing link between the price fluctuations of Bitcoin and the stock performance of leading software firms in the United States.
Is Bitcoin Mimicking US Software Stocks?
Research from Grayscale has unveiled that since the beginning of 2024, Bitcoin’s behavior has increasingly mirrored that of high-growth software stocks. This trend indicates a shift in Bitcoin’s image, transforming from a mere “digital gold” to a growth asset paralleling tech stocks.
There’s a notable parallel in Bitcoin’s price trends and US software stocks over the last two years, suggesting that similar market factors are at play. Grayscale’s findings reveal:
The synchronized movement of Bitcoin and software stocks, especially during recent sell-offs, suggests the downturn stems from overall risk aversion within growth-focused portfolios, rather than crypto-specific issues.
Are US Investors the Driving Force?
The analysis points out that most of the selling pressure originates from American investors. This is evidenced by Bitcoin trading at a discount on Coinbase compared to major platforms like Binance.
Since early February, US-traded Bitcoin ETPs have seen a net outflow of around $318 million. These substantial withdrawals have further intensified price pressures.
Could AI and Private Credit Play a Bigger Role?
Further analysis suggests that the volatility can be traced back to the private credit market, which has been influenced by innovations in artificial intelligence. The $3 trillion private credit market, where loans are provided by non-bank entities, is experiencing new risks due to AI developments.
Sector leaders like Blue Owl and Apollo finance intricate loans, some of which heavily cater to the software industry. This sector represents a significant fraction, about 17%, of BDC transactions according to PitchBook.
With companies like Anthropic advancing AI technology, there’s a looming threat to traditional software demands, leading to potential customer attrition, revenue declines, and increased credit defaults. UBS anticipates default rates in this market could hit as high as 13%.
The full impact of AI remains uncertain, but it’s anticipated that the trend will increase momentum this year.
Periods of strain in the private credit domain see new loans retract, prepayment demands surge, or asset liquidations, all of which adversely impact software stocks, echoing in the crypto space. Dan, Research Director at Coinbureau, comments on the expected pressures from mid-2025.
Bitcoin’s strong alignment with software stocks largely stems from the private credit sector’s entanglement with both industries, a pressure point since mid-2025.
Many experts concede that the stress within the private credit market is a potent, albeit overlooked, driver of crypto price shifts. Additionally, the advancement of AI may introduce fresh vulnerabilities to the crypto landscape.
