Crypto market smashed as ‘hot money’ flees sector for AI stocksCrypto markets have shed $US2.3 trillion since October 2025 as Bitcoin halves from its record high, with hot money fleeing to AI stocks amid rising rate hike fears.Cameron Micallef2 min readJune 25, 2026 - 4:56PMNewsWireCrypto values have been absolutely smashed in recent weeks, as the “hot money” leaves the sector.In the latest market rout, the flagship cryptocurrency Bitcoin dropped more than 4 per cent to $US59,548 in the early hours of Thursday, before recovering throughout the day’s trading session.This was the third time this year that Bitcoin had fallen below $US60,000, largely due to a number of economic headwinds hitting the sector and the hot money moving towards AI stocks. The price of bitcoin has halved since its recent high. Picture: Business concept.Since October 2025 the market cap of crypto currencies in total have plunged an insane $US2.3 trillion, according to industry newsletter The Kobeissi Letter/IG market analyst Tony Sycamore told NewsWire says Bitcoin alone has halved since reaching a record high eight months ago.“If you recall, Bitcoin was very frothy before having a very sharp pullback in the later part of last year.Others you may likenewsnews“That was just an unwinding of a momentum driven bubble …. What happened is we had peak good news for crypto such as the reforms from the Trump administration and pro-crypto talk.“But then we ran out of good news and crypto needs good news to help it drive higher.”Mr Sycamore said the hot money has since moved on from the crypto markets into other areas including AI stocks.“The other thing that has hit crypto besides the news, was some of the bigger longer term names starting to liquidate their positions,” he said.“In fact we saw Bitcoin being sold by Blackrock and that certainly drove sentiment lower.”Mr Sycamore said topping things off was a less accommodating US Federal Reserve, which is now tipping rate hikes. A number of factors is weighing on the crypto market. generic cryptocurrencyFollowing last week’s meeting from the Federal Reserve — the first under US president-chosen chairman Kevin Warsh — the board appeared hawkish on further rate hikes.Fed funds futures are pricing in more than an 85 per cent chance of a 25 basis point rate hike by September, reversing talk of two rate cuts earlier in the year.This was largely due to a stronger than expected US jobs market and a jump in domestic inflation. “Kevin Warsh has come out and has been keen to restore the credibility of the Federal Reserve, as he has focused on the inflationary concerns and he is keen on restoring the independence around the Fed judging by his remarks,” Mr Sycamore said.“In this environment and the market is pivoting towards rate hikes, that has sent the US dollar higher.“Investors also take stock of what it means for liquidity and what it means for risk appetite and that is two of the key drivers for crypto markets.”Mr Sycamore said overall it has been a flush out for the crypto market.Despite the massive sell-off Mr Sycamore said it could be an opportunity for Australian investors, especially in Bitcoin, for investors who have a long-term view on the alternative asset.“If you feel Bitcoin is a hedge against the devaluation of fiat currencies and plan to hold it the next 15 to 20 years and have seen it drop 50 per cent then sure (it is a buying opportunity)”, he said. “But it all depends on your views, time frames and how long you plan to hold it for.” Join the conversationAdd your comment to this storyTo join the conversation, please log in. Don't have an account? RegisterJoin the conversation, you are commenting as LogoutMore related storiesCryptocurrency‘Lose it’: Barefoot’s wild crypto advice to mumBarefoot Investor Scott Pape has given an Aussie mum some “crazy” advice, after she shared concerns about her teenage son’s cryptocurrency plan.Read moreWorld EconomyNation’s ‘insane’ new tax to smash investorsThe controversial legislation could see investors lose millions and spark a mass exodus of wealth from the European nation, critics say.Read moreCryptocurrency‘Fool’s gold’: Bitcoin drop sparks huge sell-offA dramatic overnight plunge has seen hundreds of millions in liquidations, with experts warning the digital currency faces deeper structural challenges.Read more