Bitcoin has plunged more than 16 percent in the past month, while U.S. stock markets have continued on an upward streak. During the same period, the S&P 500 rose by around 5 percent. This divergence in performance points to the possibility that the pressure on the crypto market is not just a result of crypto-specific developments, but also a shift in investor interest toward other sectors.
Investors chase momentum
Jim Ferraioli, Director of Digital Asset Research at Charles Schwab, believes the main driver of Bitcoin’s recent downturn is not related to Michael Saylor’s sales activities, but rather to a reallocation of speculative capital. Charles Schwab stands among the leading U.S.-based brokerage and asset management firms. Ferraioli emphasized that most crypto investors are guided more by price momentum than by fundamental analysis.
Ferraioli explained that throughout history, crypto investors have migrated to wherever they see momentum—and at the moment, that momentum has clearly shifted away from the crypto markets.
According to Ferraioli, Bitcoin has been locked in a bear market since last October. He highlighted how this context is crucial for understanding the current weakness. Despite ETF approvals, billions of dollars in inflows, and regulatory advances in Washington, the price has failed to stage a lasting recovery—which he views as a telling sign of the broader challenges facing the market.
There is growing evidence that investor attention this cycle is concentrating heavily on the artificial intelligence theme. Shares of companies specializing in AI infrastructure, data centers, and compute power have delivered robust returns. Meanwhile, upcoming IPOs from companies like OpenAI and Anthropic have piqued the interest of growth-focused investors.
IPO anticipation intensifies the competition
Reports now suggest that SpaceX is preparing for a potential IPO at a valuation as high as $1.8 trillion, marking the beginning of an anticipated IPO wave that could draw in over $200 billion in new capital. In this environment, Bitcoin finds itself vying for attention against other high-momentum assets across markets.
Meanwhile, activity on decentralized exchange Hyperliquid reflects this trend within crypto itself. Ferraioli noted that investors are pivoting toward synthetic contracts linked to private shares ahead of public offerings, capturing momentum ahead of traditional listings.
Glossary: A synthetic contract is a derivative instrument allowing traders to profit from an asset’s price movements without holding the asset directly. Hyperliquid is recognized as a crypto platform focusing on decentralized derivatives trading.
Ferraioli concluded that investors now chasing momentum have turned their focus to IPOs, causing Bitcoin’s appeal to decline for the time being.
ETF trades and seasonal weakness build pressure
The current headwinds do not stem solely from macro competition. On May 26, an off-exchange block sale worth $1.26 billion was reported in BlackRock’s IBIT Bitcoin ETF. NYDIG interpreted this move as a major investor rapidly unwinding their Bitcoin position.
Ferraioli sees these kinds of large transactions as an indication that investors, having reached break-even, are opting to exit rather than hold on. The much-discussed sale of 32 BTC by Strategy is viewed less as a main cause and more as a convenient narrative explaining existing weakness.
Seasonal factors are not helping either. Ferraioli pointed out that summer months are historically one of the weakest times for Bitcoin. While regulatory moves such as the Clarity Act could eventually help adoption over the long run, there is currently no clear catalyst emerging to reverse the trend in the short term.
