Institutional capital is rotating away from crypto and into other high-growth opportunities, potentially including blockbuster IPOs, as the Bitcoin suffered its worst weekly decline since the FTX collapse – hovering around 40 per cent lower than the same time last year.
Bitcoin hit US$$60,074.20 in early June 2026 and around US$63,400 as of 12 June. Wealth Within chief analyst and founder, Dale Gillham, said roughly half of all Bitcoin holders are now sitting on a loss.
“Millions of people who were told crypto was the future are now watching their investment trade below what they paid. While it’s easy to believe this when you’re making money, it’s much harder when you’re losing it.
“If enough investors begin questioning the story, panic can quickly replace conviction and if that happens, this may be the precursor to a larger sell-off.”
eToro APAC lead analyst, Josh Gilbert said recent selling pressure has come through ETFs.
“Those are largely institutional vehicles, with close to US$5 billion existing US spot Bitcoin ETFs since mid-May,” he said. “This was always going to be the problem with institutions entering the fold. They won’t follow the ‘diamond hand’ approach that many retail investors have.
He said institutional investors are de-risking in an uncertain macro environment and rotating into assets that are performing better right now.
However, as SpaceX looks to raise USD$75 billion at a valuation near USD$1.8 trillion, Gilbert said there’s no question that enormous amounts of cash are being mobilised.
“Not only are we seeing a rotation of capital, but we’re also seeing new capital hoovered up by AI right now.
“Bitcoin has long been the high-growth piece of a portfolio, but investors can now access that from AI stocks and an IPO pipeline like never before. Crypto’s competition for ‘risk’ capital has risen.”
According to Gilbert, a strong SpaceX debut would reinforce the rotation, especially given expectations it will be the largest IPO in history and garner plenty of attention.
“Bitcoin has long been the high-growth piece of a portfolio, but investors can now access that from AI stocks and an IPO pipeline like never before. Crypto’s competition for ‘risk’ capital has risen,” he told Investor Daily.
On the other hand, he believes disappointment in the IPO may affect the broader market and could see capital drift back to Bitcoin, especially at current levels.
The reported US$3.6 trillion IPO pipeline across SpaceX, Anthropic and OpenAI will be the biggest capital-raising wave in history.
“These companies have long been behind closed doors, and they offer access to two of the biggest themes set to dominate the next decade,” Gilbert said.
“It’s similar to crypto in that it offers a transformative technology story, but these companies come with revenue, audited accounts, and index inclusion attached.”
Independent Reserve’s group head of sales, Lee Eaton, said there is no doubt that AI is here to stay and that it is revolutionary.
“But, like we’ve seen in crypto markets many times before, hot money can move in fast and valuations can get stretched easily. Should the heat come out of the AI sector, I’d not be surprised to see liquidity move back into crypto markets,” Eaton said.
eToro’s Gilbert believes the key question for investors with SpaceX is whether a US$1.75 trillion valuation is justified for “a business that is part rocket company, part internet provider, part AI, and very much driven by the eccentric vision of one man, who also has the biggest automotive company in the world to run”.
While the timing of Bitcoin’s weakness alongside the slew of IPOs is hard to ignore, he said there’s no solid evidence Bitcoin’s current price is impacted.
“The biggest risk [for Bitcoin] is that the liquidity drought persists through a heavy IPO calendar and the continued strong performance of technology stocks more broadly.
“US$60,000 remains a key level to watch, given it was the high back in 2021. A break below that could cause further selling pressure, with sentiment taking a serious hit.”
While we’re in the early innings of a generational technology shift with AI, Gilbert suggested crypto still has a very long road ahead.
“[Crypto] will undoubtedly fight harder than ever for capital, and investors are becoming more selective about where capital goes,” he said.
“Crypto has matured, and we’re still seeing progress in areas such as tokenised assets, digital settlement systems, and stablecoins. So it’s not a question over crypto in general, just over certain areas.”
Adding to Bitcoin’s price pressure, Michael Saylor’s ‘Strategy Inc.’ sold 32 Bitcoin in late May to fund preferred stock dividends – a move Gilbert said spooked the market.
“Michael Saylor has made himself the face of Bitcoin, and his words have always been ‘never sell’, so when investors see him do the opposite, they’ve taken notice. Add in the returns we’re seeing from stocks linked to the AI boom, and capital has rotated away, as evidenced by the ETF outflows we’re seeing,” he said.
“I think that’s one of the big reasons we’ve seen prices fall 50 per cent from their recent highs. Not only are we seeing a rotation of capital, but we’re also seeing new capital hoovered up by AI right now.
Eaton added: “Given that Saylor subsequently bought back roughly 1,500 Bitcoin since then, the sell-off likely has more to do with capital shifting toward the hot AI sector and the SpaceX IPO.”
Eaton said liquidity has been missing in the crypto sector broadly since the 10th October crash last year.
“Any bid has been quickly sold off. Furthermore, with the AI boom attracting attention, investment into digital assets from both institutional and retail investors has decreased recently.”
He said it’s important to remember that blockchain and AI technology will continue to become ever more intertwined in the digital infrastructure of the future.
“Both technologies will require funding to reach their full potential and institutional money understands this. I think what you’ll likely find is that many tech businesses in the future won’t necessarily be strictly an AI or blockchain company but rather a combination of the two.”
Wealth Within’s Gillham added: “Bitcoin may recover again as it has surprised critics many times before but for the first time in a long time, the market is no longer asking how high can Bitcoin go. It’s asking whether the original story still holds true.”
Leave a comment