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Bitcoin (BTC) bulls are facing another setback after a sluggish recovery attempt last month. The asset dipped below $65k, wiping out billions after testing key support levels. Analysts have pointed to multiple factors, including capital rotation from crypto to other mainstream assets.
Will Funds Eventually Move Back To Bitcoin?
Crypto traders are at a crossroads amid muted recovery projections and declining on-chain metrics. Most users initially blamed institutional decline for the bear market, but the funds are going elsewhere.
Jim Ferraioli, Director of Digital Currencies, Research and Strategy at Charles Schwab, stated that Bitcoin is losing its momentum trade. This follows speculation about the impact of Michael Saylor’s sale of Bitcoin, which could negatively affect prices.
The pro-Bitcoin executive led the accumulation of the top crypto to hedge against inflation, but users fear that a price crash could trigger more liquidations. Ferraioli’s narrative is more likely given the correlation between Bitcoin and stocks, especially during seasonal rebounds.
However, BTC plunged 16% in the last 30 days while major U.S. stocks are soaring to new highs. Notably, the S&P 500 jumped 5% in the same window. Bitcoin is now losing momentum against other assets compared to the last bull season.
 
This year, AI, alongside gold and related assets, has taken most of Bitcoin’s shine. A look at the charts shows a flow of institutional capital out of risky assets and into safer bets. This occurs when the Fed tightens rates or during periods of major geopolitical hostilities.
The latter is the case, with tensions between Iran and Israel affecting global shipping and leading to a spike in energy costs. Several institutions now value gold and AI firms as better alternatives for their balance sheets and portfolio diversification.
“Bitcoin has been in a bear market since October… Not to say it’s as simple as that, but it’s kind of simple as that. We found a bottom in early February, and since then, another large Wall Street firm had a successful ETF launch, so you saw this kind of return to the institutional adoption narrative. Crypto investors historically just go wherever the momentum is, and momentum is out of crypto at the moment.”
Last year, the momentum was all Bitcoin’s, with successful spot ETF volumes rising to all-time highs. This spurred BTC price above $125k, backed up by corporate treasury purchases.