After AI-driven momentum pushed equities higher while Bitcoin lagged behind, market participants expect macroeconomic policy and evolving market structure to become the main drivers ahead.
The first half of the year was dominated by the AI trade. The second half, however, may hinge on a more complex question: which companies and assets are truly positioned to benefit from it.
The divergence between crypto and equities has become one of the defining market narratives this year. Enthusiasm around artificial intelligence lifted technology stocks to record levels, while Bitcoin (BTC) fell sharply, sliding about 46% to roughly $58,300 on Tuesday.
Analysts say investors are entering a phase where AI trends, central bank policy, and shifting market dynamics could trigger heightened volatility across both equities and cryptocurrencies, even as broader economic conditions remain relatively stable.
Former Credit Suisse global head of portfolio strategy and Kestrel Institute CIO Mark Connors said AI is no longer lifting all tech-related stocks evenly. Instead, it is creating a divide between companies building AI infrastructure and those whose products risk disruption from large language models and AI agents.
He said “the market is being split in two,” pointing to recent weakness in firms like Accenture as evidence that investors are reassessing consulting groups as AI automates more knowledge-based work. He also highlighted declines in software names such as Autodesk and Intuit, suggesting ongoing pressure on traditional software businesses.
At the same time, he expects macroeconomic uncertainty to remain the dominant force shaping markets. Correlations across equities, bonds, commodities, and crypto have increased, indicating that investors are increasingly reacting to policy signals rather than company-specific fundamentals.
He warned that “the rest of the year is going to be messy,” noting that uncertainty around Federal Reserve policy and U.S. Treasury funding could sustain volatility before conditions eventually stabilize.
Hyperion Decimus co-founder and portfolio manager Chris Sullivan offered a similar outlook of elevated uncertainty but argued investors are overly focused on narratives and not enough on underlying market mechanics.
He said structural changes brought by U.S. spot Bitcoin ETFs, along with institutional hedging activity in derivatives markets, have reshaped Bitcoin’s trading behavior and weakened its historical correlation with macro indicators.
Bitcoin’s recent decline has also raised questions about whether it has broken away from its traditional four-year cycle. While some investors believed ETF-driven institutional inflows would reduce volatility and smooth out boom-and-bust patterns, Sullivan disagrees, arguing that Bitcoin’s current drawdown still fits within historical cycle behavior.
He said he is waiting for a clearer bottoming structure before calling an end to the bear phase, adding that sentiment is approaching levels where “it’s so bearish it’s bullish” from a risk-reward standpoint.
Sullivan expects Bitcoin to bottom in the $54,000 to $58,000 range, pointing to improving on-chain data and deeply negative sentiment as potential signals for a long-term entry opportunity once current uncertainty fades.
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