By Samer Hasn, Senior Market Analyst at XS.com
Bitcoin has failed to break out above the $70,000 threshold despite multiple attempts since last week, remaining pinned near its lowest levels of 2024.
A convergence of risk factors, ranging from AI-related anxieties to a persistent higher-for-longer interest rate environment and the specter of conflict in the Middle East, is preventing liquidity from returning to the crypto market through its usual channels.
According to SoSo Value data, Bitcoin spot ETFs recorded outflows for the fourth consecutive week, highlighting the unsustainable and largely speculative nature of recent inflows. This lack of conviction is further reflected in the derivatives space, where CoinGlass reports that total crypto futures open interest remains approximately 60% below its all-time high, with Bitcoin-specific futures down 54%.
On-chain metrics from BGeometrics suggest that while whales have avoided massive distribution and have even begun to accumulate modestly in recent days, the trend remains fragile. While this activity likely helped Bitcoin stage a minor turnaround and avoid a breakdown below $60,000, the slow and fragile pace of this whale accumulation may be insufficient to support prices against the massive selling pressures and liquidation waves that often characterize this market.
This crypto stagnation comes as US equities navigate a treacherous wall of worry, with the relief from cooling inflation being eclipsed by an aggressive and often volatile repricing of the artificial intelligence narrative. According to the Wall Street Journal, investors have adopted a shoot-first-and-ask-questions-later mentality, dumping shares across the software and logistics sectors on fears that autonomous AI will render traditional business models obsolete.
This structural anxiety is compounded by a higher-for-longer interest rate outlook, bolstered by a resilient labor market and growing geopolitical uncertainty over potential new trade tariffs.
These collective pressures have triggered a massive rotation of liquidity away from high-valuation tech giants and into defensive havens such as utilities and government bonds, as the market seeks protection from a tech-led growth scare.
When risk-taking liquidity is actively fleeing the stock market, it is not surprising that it avoids the even more speculative crypto market. Until the broader equity market finds a stable floor and the AI disruption narrative transitions from panic to clarity, Bitcoin is likely to remain starved of the capital necessary to reclaim its previous highs.