American investors are dumping their Bitcoin (CRYPTO: BTC) exchange-traded funds (ETFs) as the coin continues to underperform the stock market amid the artificial intelligence boom.
IBIT Leads Spot Bitcoin ETF Outflows
Data shows that Bitcoin ETFs suffered a harsh reversal in May this year. After adding $3.2 billion in March and April, all spot Bitcoin ETFs shed over $2.43 billion in May. That was a big reversal as the funds added $1.6 billion in the first six days of the month.
Bitcoin funds lost over $1.42 billion this week after losing $1.26 billion and $1 billion in the previous two weeks. These funds have had $55.6 billion in cumulative inflows and now hold $94 billion in assets.
BlackRock's iShares Bitcoin Trust (NASDAQ:IBIT) has led these outflows. IT lost $68 million on Friday, bringing its cumulative inflows to over $63 billion in assets. Fidelity's FBTC lost $31.95 million, while Grayscale's GBTC and Grayscale's BTC lost $2.85 million and $9.74 million.
May's $2.43 billion outflows was the worst performance this year after January's $1.6 billion.
Potential Rotation to the Booming Stock Market
The ongoing Bitcoin ETF outflows is likely because of the rotation from cryptocurrencies to the booming stock market. The S&P 500 Index and Nasdaq 100 indices have soared to a record high after rising by 10% and 20% this year.
Data shows that the biggest stock market ETFs have added billions of dollars in assets. The Vanguard S&P 500 ETF (NYSE:VOO) and the Invesco NASDAQ QQQ (NASDAQ:QQQM) have added $66 billion and $11 billion in assets, respectively. Other newer ETFs like the Roundhill Memory ETF (DRAM) has added over $12 billion in assets since its inception in April.
The ongoing shift from Bitcoin ETFs to the stock market is largely attributable to the growing divergence in their relative performance. While stocks are surging, Bitcoin remains 41% below its all-time high.
American stocks are soaring for several reasons. The artificial intelligence boom has led to a surge in key stocks, with the most notable gainers being Sandisk (NASDAQ:SNDK), Micron (NASDAQ:MU), Intel (NASDAQ:INTC), and Seagate Technology (NASDAQ:STX). AI companies are soaring because of the upcoming OpenAI IPO.
Companies in the space industry are also surging ahead of the upcoming SpaceX IPO that may see it valued at over $2 trillion. The recently NASA ETF has accumulated over $2 billion in assets, making it the biggest space fund.
Bitcoin Price Technicals Point to More Downside
Worse, there are signs that the Bitcoin price will continue falling in the near future. It formed a rising wedge pattern, which is made up of two ascending and converging trendlines.
BTC price chart | Source: TradingView
The coin has dropped below the 50-day Exponential Moving Average (EMA). Also, the Average Directional Index (ADX) continues rising, a sign that the downtrend is accelerating. Therefore, the coin may continue falling, potentially to below $70,000.
Image: Shutterstock
Login to comment