Bitcoin is on track for its weakest performance at this stage of the year in at least a decade, as capital continues flowing into artificial intelligence-related stocks, semiconductor companies and anticipated blockbuster listings such as SpaceX.
The cryptocurrency has suffered a sharp sell-off in recent days, raising fresh questions about its role as both a technology investment and a digital safe-haven asset.
Bitcoin has fallen around 15% this week alone, marking its biggest weekly decline since November 2022, when the collapse of FTX shook the cryptocurrency market. Trading around $63,000, bitcoin has lost roughly one-third of its value so far in 2026, according to LSEG data.
The decline represents its worst year-to-date performance at this point in the calendar year since at least 2015.
Friday's losses deepened the downturn, with bitcoin trading more than 16% lower for the week and falling to approximately $62,500.
The cryptocurrency is now down about 50% from its all-time high of $126,000 reached in October 2025.
Bitcoin is also hovering just above the psychologically important $60,000 level, a threshold it has not traded below since September 18, 2024.
Strategy’s bitcoin sale adds pressure
Additional pressure emerged after Michael Saylor’s company, Strategy, the world’s largest corporate holder of bitcoin, disclosed that it had sold part of its holdings. The sale marked the first time since 2022 that Strategy reduced its bitcoin position, weighing on investor sentiment.
Bitcoin prices had already dropped to April lows earlier in the week following news of the sale.
Market analysts say bitcoin is struggling as investor attention shifts elsewhere.
Mark Dowding, Chief Investment Officer for Fixed Income at RBC BlueBay Asset Management, said the situation highlights how assets can struggle after moving from being market favourites to falling out of fashion.
Charles-Henry Monchau, Chief Investment Officer at Syz Group, said the latest decline reflects both Strategy’s selling activity and investors chasing opportunities in other sectors.
According to Monchau, speculative capital is increasingly moving into AI-related stocks, memory chip manufacturers and anticipated mega initial public offerings.
AI stocks dominate investor attention
One of the biggest challenges facing bitcoin is competition from the booming artificial intelligence sector. When ChatGPT launched in late 2022, bitcoin initially benefited from technology-focused investment flows.
Today, however, AI dominates financial markets as investors pour money into semiconductor makers, data center operators, chip manufacturers and related infrastructure companies.
In the past year, US semiconductor stocks have surged approximately 170%, while bitcoin has fallen around 40%.
According to LSEG data, investors withdrew more than $2.7 billion from major bitcoin exchange-traded funds during the week ending Thursday. That brought total net ETF outflows in 2026 to approximately $3.1 billion.
At the same time, four major semiconductor exchange-traded funds attracted more than $3 billion in the first week of June alone and around $21 billion so far this year.
Bitcoin loses some of its unique appeal
Analysts note that bitcoin's increasing institutional adoption has also altered its investment profile. The entry of major investment banks, institutional investors and exchange-traded products has reduced some of the characteristics that once made bitcoin attractive as a portfolio diversifier.
Its traditionally high volatility has moderated, while its relationship with mainstream financial markets has evolved significantly.
The Deribit DVOL index, which tracks implied volatility in bitcoin options, currently stands around 47.
While that is the highest level since early April, it remains close to the record low of approximately 31 reached in late May.
Before 2024, the index rarely fell below 50.
Correlation with stock markets shifts
Before 2020, bitcoin showed little consistent relationship with the S&P 500. Over the past six years, however, bitcoin and US equities have often moved in tandem.
Recently, that relationship has changed again.
Rajiv Sawhney, Head of International Portfolio Management at Wave Digital Assets, said the previously strong positive correlation between bitcoin and major stock indexes has weakened sharply in recent weeks.
As technology stocks continue setting record highs, bitcoin has failed to follow the same upward trend.
The divergence is prompting investors to question bitcoin’s two dominant narratives: that it functions as "digital gold" during times of uncertainty and that it behaves like a high-growth technology asset.
Growing competition within crypto markets
Bitcoin is also facing increasing competition from within the cryptocurrency sector itself. The digital asset ecosystem now includes major competitors such as Ether, Solana and BNB, alongside hundreds of smaller altcoins.
According to CoinGecko, alternative cryptocurrencies now account for roughly one-fifth of the overall crypto market.
The rapid growth of stablecoins has added another challenge.
Stablecoins, which are typically pegged to traditional currencies such as the US dollar, now represent nearly 13% of the crypto market compared with around 7% a year ago.
Bitcoin's market share has declined to 56% from 63% over the same period.
Trading volumes also highlight the shift.
CoinGecko data shows that volume in Tether, the largest stablecoin, now exceeds the combined trading volume of bitcoin and ether.
Meanwhile, volume in USDC equals that of the next ten cryptocurrencies combined.
Regulatory momentum slows
Another factor weighing on sentiment is uncertainty surrounding cryptocurrency legislation in the United States. Investors had expected the proposed Clarity Act, a major crypto market structure bill, to boost institutional confidence and attract new capital.
However, the legislation appears increasingly delayed as lawmakers remain divided and other political priorities take precedence.
Geopolitical tensions create uncertainty
Ongoing uncertainty related to the conflict involving Iran has also contributed to market caution. While global stock markets have continued reaching new highs, bitcoin has remained under pressure.
This has further challenged the perception of bitcoin as a geopolitical hedge during periods of international instability.
The broader cryptocurrency sector faced another setback this week when privacy-focused cryptocurrency Zcash plunged. The decline followed an AI-assisted security review that uncovered a long-standing vulnerability that could potentially have allowed counterfeit ZEC tokens to be created.
The development added to an already difficult week for digital assets.
Some investors still see opportunity
Despite the recent sell-off, some market participants remain optimistic about bitcoin’s long-term prospects. Speaking to CNBC's Squawk Box Europe, Strive Chief Executive Matt Cole argued that bitcoin's underlying fundamentals remain strong.
Cole noted that bitcoin has reached its 200-week moving average for only the fifth time in its history.
According to him, each previous visit to that level proved to be an ideal buying opportunity, and he believes the current decline could eventually produce similar results.
For now, however, bitcoin remains under intense pressure as investors weigh competing opportunities in artificial intelligence, semiconductor stocks and other fast-growing sectors.
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