Bitcoin and most altcoins have crashed in the past few weeks, erasing billions of dollars in value. BTC has dropped to $65,000, while Ethereum has settled below $2,000. This article explores why the ongoing surge of the Kospi, Nasdaq 100, and Nikkei 225 indices may be contributing to the crypto crash.
Crypto Crash Triggered by Soaring Kospi, Nasdaq 100, and Nikkei 225
The United States, Japan, and South Korea are some of the most active countries in crypto trading. Chainalysis data show that these countries lead in volume and adoption.
The stock market in these countries is soaring. In South Korea, the Kospi Index has jumped by 110% this year and 226% in the last 12 months. This surge has helped to mint two $1 trillion companies: Samsung and SK Hynix.
In Japan, the Nikkei 225 Index has jumped by 34% this year and 81% in the last 12 months. Kioxia and Softbank are leading the rally. Kioxia is a major player in the memory industry, while Softbank has made several AI investments, including OpenAI.
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In the United States, the Nasdaq 100 Index has jumped by 20% this year and 42% in the last 12 months. This is important because the index tracks the largest technology companies in the world.
Rotation From Crypto to Stocks
Therefore, these surges have drawn people from other assets to the stock market, which is offering more returns. Besides, Bitcoin is in its third year of underperforming the market. Also, many traders remember October 10 when investors lost over $20 billion in the biggest liquidation event.
One crucial sign that this rotation from Bitcoin to stocks is in the United States, where investors have dumped their Bitcoin and Ethereum ETF holdings. The two have shed over $3.5 billion in assets in this period. On the other hand, top ETFs added over $200 billion in assets in May alone, with VOO clocking the $1 trillion milestone.
Another positive sign is that top AI coins like Humanity, Worldcoin, and Venice have jumped by double- or triple-digit percentages this year, and their trading volume is soaring.
On the positive side for the crypto market, these indices are likely to reverse in the near future, as they are highly overbought. They are also in the markup phase of the Wyckoff Theory, meaning that they may enter the distribution and markdown phases. If this happens, investors are likely to rotate back to BTC.
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