Bitcoin hits lowest since February: are investors selling the crypto for big IPOs?

Bitcoin fell to $65,380 on Wednesday, the lowest level since February, CNBC writes. Bitcoin's price has fallen more than 45% since its October highs, when the largest cryptocurrency by capitalization was worth more than $120,000. Other asset classes are distracting investors away from cryptocurrencies, the channel said. The market is waiting for the public offering of AI startups OpenAI and Anthropic, as well as Elon Musk's space company SpaceX, which is causing an outflow of liquidity from cryptocurrencies, but it's not just that, analysts wrote.

The world's largest cryptocurrency was losing more than 2% of its value in trading on Wednesday, June 3. Since mid-Ma, U.S. exchange-traded funds on bitcoin and Ethereum have recorded net outflows of about $3.4 billion and $674 million, respectively, Bloomberg writes.

At the same time, other assets have been mostly growing lately. Thus, the broad market index S&P 500 and the index of the technology sector Nasdaq Composite on Tuesday, June 2, closed at record levels, although in trading on Wednesday declined within 1%. Most Asian markets also rose, and Japan's Nikkei 225 index on Wednesday hit an all-time high.

"The broader problem is liquidity rotation," QCP traders noted in a conversation with CNBC. - Cryptocurrencies face competition for capital as stock markets continue to outperform. Both investors specializing in crypto assets and traditional asset managers are switching to more attractive growth stories in the equity market."

According to QCP, investors may be releasing liquidity from bitcoin for opportunities in the private market or to participate in initial public offerings of companies such as SpaceX, OpenAI and Anthropic. This is especially true for IPOs, which are considered one of the most anticipated events in the financial markets this year.

While it's hard to name one specific reason for the recent weakness in the cryptocurrency market, investors point to several possible factors at once, CNBC writes. Among them is Strategy's first bitcoin sale in four years on Monday. Alternative derivatives, such as options with expiration on the day of position opening (0DTE) and open-ended futures, are also growing in popularity.

"Now you can see older cryptoinfluencers posting options trades," Prosper Trading Academy technology stocks and trend-following strategist Charlie Moon said on CNBC. - People used to satisfy the craving for intraday trading with bitcoin, but now they're finding other tools to do it."

A closer look at bitcoin's relative performance compared to stocks, which is as weak now as it was in 2018 and 2019, reveals a simpler explanation: the main driver for cryptocurrencies continues to be rising interest rates, even if they're not yet hindering stock market growth, CNBC notes. Some of the harshest "cryptozymes" came in 2018 and 2022, when the U.S. Federal Reserve raised rates.

"Look at the cost of funding, from U.S. Treasuries to Japanese government securities: yields have gone up just about everywhere," David Jackanski, CEO of Quantify Funds, which manages the ISBG ETF, which combines bitcoin and gold investments with supplemental income, told CNBC. - This market is growing thanks to innovation and productivity gains, so it makes sense that scarce assets are being left behind. You need to be able to diversify your bitcoin investments so that it is not a standalone source of risk in your portfolio."

Traders on the predictive markets platform Kalshi believe that the cryptocurrency still has room to fall further within the current "cryptozyme", CNBC writes. They estimate that there is a nearly 80% chance that the token price will fall below $60,000 in 2026. That would mean bitcoin would update its low for that year. Traders also believe there is a 52% chance of the price falling below $50,000 this year.

Kalshi traders have also become more pessimistic about the prospects of bitcoin returning to a value above $100,000. Now only 27% of investors bet on the likelihood of such an outcome this year, although in early Ma such bets were 50%. Traders at Polymarket estimate the probability that bitcoin will renew its historic high in 2026 at 12%.

This article was AI-translated and verified by a human editor