Bitcoin Loses Momentum Trade as Capital Rotates Into AI and IPOs

TLDR

• Bitcoin has dropped over 16% in the past month while the S&P 500 gained approximately 5% over the same period.
• Schwab’s Ferraioli says crypto investors chase momentum, which has now shifted toward AI stocks and upcoming IPOs.
• A $1.26 billion block sale of BlackRock’s IBIT ETF signals large investors are exiting BTC near breakeven levels.
• Seasonal weakness and IPO competition from SpaceX and others are adding further pressure on bitcoin’s price outlook.

Bitcoin is facing renewed selling pressure, losing over 16% of its value in the past month even as U.S. equities hit all-time highs. The S&P 500 gained roughly 5% over the same stretch.

According to Charles Schwab Director of Digital Currencies Research Jim Ferraioli, the selloff has less to do with Michael Saylor’s bitcoin sales and more to do with a broader shift in speculative appetite. Capital is moving fast, and crypto is no longer the primary destination.

Crypto Traders Follow Momentum, Not Fundamentals

Bitcoin has been in a bear market since October, Ferraioli noted. That context matters when examining the current price weakness.

Despite strong institutional tailwinds — including new ETF approvals, billions in inflows, and regulatory progress in Washington — the asset has struggled to sustain meaningful price recovery.

The reason, in Ferraioli’s view, is structural. Crypto investors are momentum chasers, not fundamental analysts. “Crypto investors historically just go wherever the momentum is,” Ferraioli said.

“And momentum is out of crypto at the moment.” When another asset class becomes more compelling, capital follows just as quickly.

Artificial intelligence has emerged as the dominant speculative narrative this cycle. AI infrastructure stocks, data centers, and computing firms have generated strong returns.

Anticipated IPOs from firms like OpenAI and Anthropic have become major focal points for growth-oriented investors.

Elon Musk’s SpaceX is also preparing a listing potentially valued at $1.8 trillion, and a broader wave of high-profile IPOs could raise more than $200 billion in total.

Beyond traditional markets, crypto traders are also getting drawn into the IPO frenzy directly. Ferraioli pointed to activity on decentralized exchange Hyperliquid, where traders can access synthetic contracts tied to private pre-IPO shares.

“I think people that are excited about momentum are getting excited about IPOs,” he said. Bitcoin is now competing against every major momentum trade in the market simultaneously.

ETF Flows and Seasonal Trends Add Pressure

The pressure is not limited to macro competition. On May 26, a $1.26 billion block sale of BlackRock’s IBIT bitcoin ETF was executed off-exchange.

Research firm NYDIG described the transaction as a large investor seeking a rapid exit from bitcoin exposure, rather than the unwinding of a hedging position.

That kind of selling reflects a pattern Ferraioli described plainly: investors who are near breakeven are choosing to exit rather than hold.

“I think you get to those levels and you get people that are saying, ‘Hey, I made my money back, maybe I’ll revisit it later,'” Ferraioli said.

Ferraioli also downplayed the narrative around Strategy’s 32 BTC sale. “I don’t think [the sale] is what’s really driving it,” he said, calling it a convenient story attached to a trend already underway.

Seasonal dynamics are compounding the issue. Summer has historically been one of bitcoin’s weakest periods. “People know that for bitcoin seasonally, summer is the weakest time,” Ferraioli noted.

Regulatory progress, such as the anticipated Clarity Act, may support longer-term adoption. In the near term, however, no single catalyst appears ready to reverse the trend. “There’s a lack of a reason to be buying here when there’s other things you can choose,” Ferraioli said.

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