Bitcoin Stalls as Stock Market Rockets, Flashing a Warning Sign

The S&P 500, the Dow Jones Industrial Average and the tech-heavy Nasdaq have all notched record highs since November, with traders braced for Elon Musk

Stock markets have rocketed higher since the election of U.S. president Donald Trump, with the S&P 500, the Dow Jones Industrial Average and the tech-heavy Nasdaq all hitting record highs.

But as the market rushes to catch up with Trump’s plans for a U.S. sovereign wealth fund, the stalled bitcoin and crypto market may be quietly flashing a stock market warning.

“Weakness in bitcoin is a macroeconomic negative, historically, and typically coincides with declining liquidity,” boding ill for stocks, Tyler Richey, co-editor at Sevens Report Research, told MarketWatch, adding “bitcoin is seen by some investors as a proxy for liquidity.”

“There was a lot of froth there for risk assets after the election,” Richey said, pointing to the soaring stock market that was powered by the so-called Magnificent Seven technology stocks—Apple (AAPL) , Microsoft (MSFT) , Alphabet (GOOGL) , Amazon (AMZN) , Nvidia (NVDA) , Tesla (TSLA) , and Meta (META) .

The bitcoin price also rocketed higher following Trump’s November election victory, with traders cheering Trump's bullish bitcoin and crypto campaign promises.

But the bitcoin price rally has since stalled, with some warning of market manipulation and price suppression, as the price of gold continues to climb.

“The bitcoin rally has stalled and turned sideways amid a price drift away from record highs, confirmed by momentum indicators and relative-strength readings, to the benchmark safe-haven store of value, gold,” Richey wrote in a Tuesday note seen by MarketWatch.

The bitcoin price has lost momentum in recent weeks after following the S&P 500, the Dow and the Nasdaq indices to all-time highs.

The bitcoin price has dipped to under the closely-watched $100,000 per bitcoin level, with some analysts pointing to the increasing hawkishness of the Federal Reserve as one reason for the downturn.

“What’s it going to take to break us out of this three-month holding pattern,” asked Neil Roarty, cryptocurrency analyst at ClickOut Media, in emailed comments. “Probably a more decisive commitment to interest rate cuts from the Federal Reserve. Until then, expect bitcoin price action to continue ebbing and flowing.”