It’s a relatively rare phenomenon: While the stock market continues to experience record gains (the S&P 500 is up more than 16% this year), Bitcoin and other cryptocurrencies continue to struggle, marking the first time the cryptocurrency and stock markets have split since 2014, according to Bloomberg.
Most read from Fast Company
This split of Bitcoin falling while stocks soared is somewhat unusual. As of writing, at noon on Friday, the cryptocurrency (BTC) was trading down more than 4%, hovering around $88,945, well below its all-time high of over $125,000 but still above its recent low of $85,000 (which was down nearly 30% from its high).
Here’s what to know.
While Bitcoin is known for its volatility, historically the digital currency and stocks have traditionally risen and fallen together.
So why is there a cryptocurrency sell-off? What’s causing the decline in investor confidence?
The Trump administration’s early embrace of cryptocurrencies, introducing crypto-friendly regulations, has partly bolstered confidence in cryptocurrencies.
However, as fast company As previously reported, a number of different micro and macroeconomic factors have begun to unsettle investors, who are withdrawing money from more volatile digital currencies.
These factors include rising inflation, changes in interest rates, waning enthusiasm for AI-related stocks due to concerns about an AI bubble, and growing concerns about the widening gap between low-income and wealthy Americans that is creating a “K-shaped economy.”
Bitcoin is a cryptocurrency. Unlike standard currencies such as the U.S. dollar or the European Union euro, it exists only in digital form and operates without government or bank regulation, with peer-to-peer transactions making it harder to track. Instead, Bitcoin uses a decentralized blockchain ledger to verify and securely record transactions.
This article originally appeared on fastcompany.com
Subscribe to get the Fast Company newsletter: http://fastcompany.com/newsletters
