Bitcoin a drop to $67,000 could signal a tough summer ahead as investor capital continues to flow into artificial intelligence (AI) stocks and away from crypto.
In a report released Tuesday, Vetle Lunde, director of K33 Research, said Bitcoin’s weakness reflects declining institutional demand, strong ETF outflows and growing vulnerabilities in derivatives markets.
“Much of the market sees the opportunity cost of holding BTC as too high while everything related to AI is skyrocketing,” Lunde wrote.
This discrepancy has become increasingly difficult to ignore. Bitcoin has failed to reclaim its 200-day moving average while the Nasdaq and S&P 500 continue to set record highs. Investors are also looking forward to potential IPOs from companies like SpaceX and Anthropic, which could divert capital away from crypto, Lunde argued.
This rotation is evident in Bitcoin ETF flows. Bitcoin spot exchange-traded products have lost 62,794 BTC over the past three weeks, the second-largest outflow streak on record, the report notes.
K33 said ETF sales accelerated after Bitcoin’s failed attempt to surpass its 200-day moving average last month.
The $60,000 fund called into question
The shift in tone marks a notable shift for K33. The company previously claimed that bitcoin’s fall to around $60,000 in February likely marked the biggest decline of the cycle. A key part of this thesis concerned the unusually negative funding rates in the perpetual futures markets, which reflected persistent bearish positioning and created the conditions for sharp short squeezes.
This setup contributed to Bitcoin’s rebound towards $83,000. But the rally ultimately stalled at the 200-day moving average, a level that has capped previous bear market rallies.
Today, the situation for derivatives is very different, Lunde said. CME Bitcoin futures open interest fell to its lowest level since October 2023, a sign that institutional traders are reducing their exposure. Meanwhile, perpetual futures funding rates have risen alongside open interest, even as bitcoin falls, suggesting that leveraged long positions are part of a weakening market.
While the company hasn’t completely abandoned its view that $60,000 marked the bottom of the cycle, the tone has become more defensive.
“We view the latent selling pressure in these leveraged long positions as a warning of possible deeper lows and recommend caution,” the report said.
K33 still views bitcoin as undervalued relative to stocks over the long term. But with institutional demand waning, investors fleeing ETFs and capital chasing higher-performing sectors, the firm says the market is facing a tougher backdrop than just a few weeks ago.
“With outside capital reluctant to enter and existing holders reducing their exposure, we could find ourselves facing a turbulent summer,” Lunde wrote.
