Key takeaways:
- Surging spot Bitcoin ETF outflows and a put-heavy options expiry point to fading institutional demand.
- Risk-reward shifts toward tech stocks, leaving crypto traders to seek catalysts beyond macroeconomic tailwinds.
Bitcoin ($BTC) traded down 9% in three days, hitting its lowest level since September 2024. The $58,000 retest triggered over $1 billion in liquidations across bullish $BTC leveraged positions. Despite a modest recovery to $59,500, Bitcoin traders remain uneasy as the S&P 500 index and gold prices fully erased their intraday losses.
Bitcoin/USD (orange) vs. gold/USD & Nasdaq 100 futures (green). Source: TradingView
The market downturn on Thursday lined up with the release of the US Personal Consumption Expenditures index, which showed a 4.1% increase in May from the prior year. Yet as Crude Brent oil prices pulled back to $75 from $95 just one month earlier, investors grew more confident that inflation had peaked. As a result, the cash freed up by lower energy costs is boosting the stock market.
Shares of Micron, Sandisk, Applied Materials. Source: TradingView
The tech sector kept delivering strong surprises, with Micron Technology (MU) jumping 16% after solid quarterly earnings and Sandisk (SNDK) riding along with an 18% gain. Applied Materials (AMAT) rose 10% thanks to its new chipmaking tools. Investors’ renewed faith in the sector also mirrors the US government administration’s recent emphasis.
Fixed income offers a more compelling hedge alternative
Even if Bitcoin does not directly compete with the artificial intelligence sector, traders’ risk-reward views have likely tilted toward stocks. This shift followed the US government taking a 9.9% stake in Intel, proposing $2 billion for quantum computing firms, opening federal lands for data center projects, and setting a framework for “frontier models” releases.
Investors worried about inflated AI valuations after Elon Musk’s SpaceX (SPCX) shares fell 32% from their peak can find comfort in 5-year US Treasuries yielding 4.15%. Demand for non-yielding assets like Bitcoin faded as traders now see an 80% chance of US interest rate hikes by December, up from 68% a month ago, according to the CME FedWatch Tool.
US-listed spot Bitcoin ETFs daily net flows, USD. Source: SoSoValue
Bitcoin’s appeal also took a hit from the massive $469 million net outflows in spot $BTC exchange-traded funds (ETFs) on Wednesday. The metric serves as a key proxy for institutional demand. Sentiment worsened further as Strategy (MSTR) now sits on a huge unrealized loss after buying $64.1 billion worth of Bitcoin since 2020.
Strategy (MSTR) Bitcoin reserves and cash position, USD. Source: Strategy
The upcoming $13 billion Bitcoin options expiry on Friday heavily favors put (sell) instruments. Most neutral-to-bullish strategies will likely expire worthless, since 78% of call (buy) options are priced at $72,000 or above. Put options open interest on Deribit will exceed call options by $3.4 billion.
Bitcoin’s price momentum shows little tie to stocks due to heavy ETF outflows, a bearish options expiry skew and Strategy’s mounting unrealized losses. Bitcoin traders must now hunt for unique catalysts beyond equity market tailwinds to spark a turnaround.
