- Bitcoin price retreated sharply this year, even as the stock market surged.
- Spot BTC ETFs have suffered substantial outflows as investors pumped cash to stock ETFs.
- American companies are doing well, with their earnings growth accelerating.
Bitcoin price has completely diverged from the stock market this year, as most investors have turned to faster-growing equities. BTC is stuck in a bear market after falling by over 42% from its October last year high, while top US indices have soared to record highs.
Bitcoin Price Falling Amid Rotation to AI and Space
The main reason why Bitcoin and the crypto market have diverged from the stock market is the ongoing artificial intelligence (AI) boom. A closer look at the best-performing companies in the S&P 500 Index shows that they are all in the AI industry. This includes companies such as SanDisk, Micron, Intel, and Western Digital. Micron entered the $1 trillion market cap club this week.
Investors have continued piling capital into the stock market. For example, the recently launched DRAM ETF has achieved $12 billion in assets within two months, making it the fastest-growing ETF in the world.
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Other AI-focused ETFs, such as Global X Robotics & Artificial Intelligence (BOTZ), iShares Future AI & Tech ETF (ARTY), and ROBO Global Robotics and Automation Index (ROBO), have attracted substantial inflows this year.
In contrast, Bitcoin ETFs have continued to shed assets this year. They have shed over $2 billion this month, with $733 million of this happening on Wednesday this week. In total, the net inflows in spot Bitcoin ETFs this year are less than $600 million. As such, there are signs that investors are simply getting fatigued about Bitcoin’s underperformance, selling their assets, and moving to stocks.
In addition to AI assets, investors are moving into companies in the space industry, such as Rocket Lab, Planet Labs, and Intuitive Machines. The most recent NASA ETF has already accumulated over $1.5 billion in assets as investors anticipate the SpaceX IPO.
The stock market is also benefiting from the ongoing growth trajectory. For example, FactSet data showed that average earnings growth in the first quarter was 28.4%, the fastest rate since 2021.
BTC Price Prediction: Technical Analysis
Technical analysis points to further downside in the near term. The most important bearish signal is that it formed a rising wedge pattern, which consists of two ascending, converging trendlines. Bitcoin has already plunged below the lower side of the wedge, confirming the bearish breakout.
The coin’s Average Directional Index (ADX) has jumped to 22 and is pointing upwards. It has reached its highest level since May 20th. Bitcoin also remains below all moving averages.
Therefore, the path of the least resistance is bearish, with the next key target to watch being at $70,000. On the other hand, a move above the resistance level at $80,000 will signal that there are still bulls left in the market.
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