Bitcoin fell as low as $65,385 on Wednesday, its lowest level since February. Meanwhile, US stocks continued their strong performance, with the S&P 500 and Nasdaq 100 indices closing at record highs the previous day. Asian stocks also generally rose, with the Nikkei 225 index hitting a new all-time high. Market analysts believe that cross-asset fund rotation is suppressing the performance of crypto assets.
Funds flowing into the stock market and hot IPOs
Digital asset trading firm QCP stated that the bigger issue currently lies in liquidity rotation. As the stock market continues to outperform, the crypto market is facing stronger competition for funds, with not only crypto-native investors adjusting their positions, but traditional asset management institutions also shifting towards a stronger equity narrative.
QCP believes some investors may be releasing liquidity from Bitcoin and redirecting it to the private market or upcoming large IPOs. The firm specifically mentioned SpaceX, OpenAI, and Anthropic, calling these projects among the most watched market events this year.
The market is watching the support level around $65,000.
In terms of price, the market is primarily focused on whether Bitcoin can hold the $65,000 area. BTIG technical strategist Jonathan Krinsky stated that the $65,000 level is close to a key support zone for the year; if it breaks down, the price could further decline towards the $60,000 area, where the year's low is located.
QCP's assessment is similar. The agency stated that the $63,000 to $64,000 range is the first support area, as buying activity occurred in this area during February and March of this year.
If the price continues to fall, $60,000 may become the next focal point.
QCP further points out that if Bitcoin falls below $63,000 to $64,000, the market will turn its attention to $62,000, followed by the more important psychological level of $60,000, which is also close to the low of this cycle.
If selling pressure continues to intensify, $58,000 will become the next major support level. Overall, against the backdrop of a strong global stock market and hot IPOs attracting funds, Bitcoin still faces short-term pressure from liquidity diversion.
