Why is Bitcoin lagging behind benchmark stocks?

Analysts said that stocks and Bitcoin are currently driven by completely different market forces.

Global stocks have made new highs recently, but Bitcoin (BTC), the largest cryptocurrency by market cap, is trading nearly 42% below its all-time highs.

This divide has left cryptocurrency investors searching for answers, especially as the market has lumped the two asset classes together under the rubric of “risk.”

Divergent motivations between stocks and Bitcoin

According to market researchers at XWIN Japan, a reason Because the difference is simple: stocks and Bitcoin run on “different engines.”

They note that stock gains are tied to AI-related earnings growth, capital spending from companies like Nvidia, stock buybacks, as well as steady ETF inflows. As such, investors can point to real and visible earnings growth.

However, Bitcoin does not carry profits or cash flows, as its price depends on new capital entering the market, making it more vulnerable to liquidity shifts.

At the moment, according to XWIN’s assessment, this capital is not arriving. Remember, spot Bitcoin ETFs exist registered Outflows were notable during the second half of May, with data from SoSoValue showing that since May 15, funds have lost more than $3.5 billion. At that time, the largest outflows were recorded on May 18 ($648.64 million) and May 27 ($733.43 million). There hasn’t been a single green day since the $131.31 million inflow on May 14.

XWIN analysts also noted that in past strong cycles, Bitcoin’s price was often supported by increased user activity. But right now, the asset is becoming increasingly market-like as the price rises while participation fades. That’s the main difference, they said.

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“Stocks rise because companies make profits. Bitcoin rises when new liquidity and new participants return,” they explained.

As a result, investors have allocated more money to stocks, which they view as “dividend growth assets,” while moving away from those that rely on liquidity, including Bitcoin.

And it’s not all talk. like male According to analyst Ash Crypto earlier today, the Nikkei surpassed the 66,500 mark for the first time ever on May 29, with Japanese stocks adding around $3.2 trillion this year alone. It was the same story in Korea, which also KOSPI He hits It is a new all-time high, adding 150 trillion won to the total market capitalization.

What do you need Bitcoin?

Just as the Nikkei and Kospi shined, Bitcoin shined yesterday It crashed To about $72,600, according to CoinGecko data, with market watchers suggestion It may have been affected by the resumption of hostilities between the US and Iran, as well as someone unloading a massive $1.3 billion position in BlackRock’s spot Bitcoin ETF, IBIT.

Since then, the flagship cryptocurrency has climbed back above $73,000, but that’s not impressive, considering it traded near $78,000 at one point over the past seven days. The current price also represents a decline of more than 4% in the past month, as well as a decline of approximately 32% year over year.

To turn things around, XWIN analysts stated that Bitcoin needs stronger inflows from ETFs, an increase in its on-chain activity, and improved Coinbase Premium. They also believe that a weaker dollar could help bring about a more sustainable recovery for the cryptocurrency.