Investors Turn to Stocks as Trade War Tensions Ease
Bitcoin (BTC) hit a local high of $105,720 on May 12, marking its best price in over three months. However, just as quickly, it tumbled to $102,000, catching traders off guard. The drop came right after the United States and China announced progress on a potential tariff reduction agreement, sparking confusion over why Bitcoin, a traditionally independent asset, responded negatively to seemingly positive news.
According to Yahoo Finance, the deal involves a 90-day suspension of import tariffs. U.S. Treasury Secretary Scott Bessent added that the truce could be extended if both nations continue constructive negotiations. Discussion points reportedly include "currency manipulation," "steel dumping," and semiconductor export restrictions.
Risk-On Mood Hurts Bitcoin’s Safe-Haven Appeal
Over the past month, Bitcoin gained 24%, while S&P 500 futures rose 7% and gold remained flat. With macroeconomic conditions improving, investors are flocking back to stocks, pushing Bitcoin aside as the go-to risk hedge. Currently, Bitcoin’s 30-day correlation with equities sits at 83%, indicating the crypto asset is behaving more like a tech stock than a store of value.
Another key factor: Bitcoin’s market cap has now exceeded both silver and Google, positioning it as the sixth-largest tradable asset globally — a status that puts more pressure on its market behavior.
Whale Activity Raises Eyebrows
From May 5 to May 11, investment firm Strategy acquired an additional 13,390 BTC. Together with BlackRock, Strategy now controls 1.19 million BTC, or roughly 6% of all Bitcoin in circulation. This concentration of holdings has some market watchers concerned that a few major players could be propping up prices.
Critics like Peter Schiff argue that if Strategy’s average purchase price rises too high, it may be forced to offload some BTC to cover debt obligations. Still, Strategy recently doubled its capital limit, raising $21 billion via stock issuance and another $21 billion in debt, making a near-term selloff unlikely.
The Bigger Picture: Macroeconomics in Play
While crypto headlines dominate trader conversations, the real story behind Bitcoin’s dip may lie in the macroeconomic shift. With tariffs easing, stocks are benefiting from higher expected earnings, drawing capital away from assets like Bitcoin and gold. In fact, gold dropped 3.4% on May 12 as investors ditched traditional safe havens.
The US Dollar Index (DXY) also surged to a 30-day high, historically showing an inverse correlation with gold — and by extension, Bitcoin. Despite a 0.3% GDP dip in Q1 and a 6.1% spike in pending home sales, confidence in the economy remains high, fueling demand for equities.
Will Bitcoin Fall Below $100K?
The outlook isn’t entirely bearish. Between May 1 and May 9, U.S.-based Bitcoin ETFs saw inflows of $2 billion, signaling strong institutional demand. The fact that Bitcoin held most of its 24% monthly gains suggests this rally isn’t retail-driven hype but rather strategic accumulation.
While some analysts warn of a short-term "technical sell-off" below $100K, the broader trend appears healthy — with investors rotating based on shifting economic expectations rather than fear or doubt.
