The recent surge to record highs across many global markets has left one type of investment, once a favorite among speculators, far behind: Bitcoin. On Wednesday, the world's largest cryptocurrency fell for a fourth consecutive trading session. As of 9:30 AM Beijing Time on Thursday, Bitcoin's trading price had broken below the $63,000 mark. Year-to-date, Bitcoin has now declined by more than 28%, and its price has been cut in half from the all-time high above $126,000 recorded in early October last year.
According to data compiled by CoinGlass, as a full-blown "crypto winter" descends, forced liquidations within the crypto sphere over the past 24 hours have reached $1.2 billion. Since the acceleration of this round of Bitcoin's decline began in early June, this forced deleveraging—where cryptocurrency exchanges automatically close out high-risk trades—has reached its highest level since February.
It is worth noting that over the past few months, after plummeting from its highs, Bitcoin had actually been stabilizing within a relatively narrow trading range. However, some of Bitcoin's staunchest former supporters have recently changed their minds, delivering what could be a "fatal blow" to market confidence.
MicroStrategy Inc executive chairman Michael Saylor was once famous in crypto circles for his mantra "Never sell Bitcoin." Yet the company stated on Monday that it sold 32 bitcoins last week, realizing a profit of approximately $2.5 million, and plans to use the proceeds for preferred stock dividends. The very next day, June 2, Bitcoin's price fell below $70,000 for the first time since early April.
MicroStrategy's unexpected sale has led many investors and analysts to worry that the market may face further downward pressure. Further selling by the company could trigger a sharp drop in Bitcoin's price. "This shift from MicroStrategy may just be the beginning," said Joshua Lim, global co-head of markets at crypto trading firm FalconX. "Most Bitcoin buyers will likely stay on the sidelines until some of the major pending catalysts this summer fade."
AI Frenzy and Mega IPOs Siphoning Funds from Crypto
In fact, the reduction in holdings by crypto giants is only a surface-level crisis. Bitcoin's deeper current predicament lies in the fact that the hot AI wave in the U.S. stock market and the successive launch of mega IPOs may be continuously siphoning funds away from the crypto sphere.
Bitcoin's recent decline stands in stark contrast to its historical correlation with tech stocks—the digital currency has traditionally moved in sync with risk assets. However, in stark contrast to the bleak situation in crypto, the recent surge in tech stocks has pushed the S&P 500 to a new high earlier this week. The Nasdaq 100 Index has risen over 40% in the past 12 months, while Bitcoin has fallen 37%.
Many industry insiders note that many retail traders, who once fueled the most frenzied bull runs in cryptocurrency, now seem captivated by the AI stock frenzy. The Philadelphia Semiconductor Index—which includes high-growth stocks like NVIDIA Corp, Intel Corp, and Micron Technology Inc—last week recorded its strongest performance for the first 100 trading days of a year on record.
Looking at fund flows, many Bitcoin ETF investors are also currently withdrawing. According to ETF research analyst James Seyffart, more than a dozen spot Bitcoin ETFs launched in 2024 by Wall Street firms including BlackRock Inc and Fidelity Investments have seen net outflows for 12 consecutive days, totaling approximately $4 billion. "We've basically been range-bound since October, but this is the first real Bitcoin bear market we've witnessed since the ETFs launched," Seyffart said.
"We've been moving some funds out of Bitcoin and digital assets and into AI stocks," said Carney Mak, partner at FXHB Asset Management. "Compared to digital assets, AI concept stocks currently offer a more attractive risk-reward ratio, prompting some investors to adjust their portfolio allocations."
Jake Ostrovskis, head of over-the-counter trading at crypto trading firm Wintermute, stated, "To get people interested in crypto and Bitcoin again, we might need the AI hype to cool off a bit."
However, as investors prepare for a series of blockbuster IPOs—led by Elon Musk's rocket company SpaceX and AI startup giants Anthropic and OpenAI—U.S. tech newcomers are likely to continue occupying the market spotlight. Quantitative trading firm QCP, which focuses on cryptocurrency, noted that Bitcoin's fundamental problem currently is a liquidity rotation.
With the equity market consistently outperforming, the attention of both crypto-native investors and traditional asset managers is being captured by the stronger stock narrative. Investors are likely shifting funds from Bitcoin into private markets or upcoming IPO projects like SpaceX, OpenAI, and Anthropic.
While some die-hard Bitcoin supporters still hold hope that the potential passage of the U.S. crypto bill, the Clarity Act—which would establish a regulatory framework for all digital assets—could unlock a new wave of institutional capital for cryptocurrency and lift Bitcoin out of its slump, skeptics question whether the bill can trigger a significant price increase. They note that the regulatory environment during the Trump administration was already quite friendly for crypto. "When people are just chasing everything else, it's very difficult to find a strong enough catalyst to turn the market around," Ostrovskis said.
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