Why is Bitcoin collapsing? Have institutional funds ultimately moved to gold and tech stocks?

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Bitcoin (BTC) is once again taking a direct hit from macroeconomic variables, being pushed aside by tech stocks and gold. With institutional fund outflows and large-scale long position liquidations coinciding, the total market capitalization of the cryptocurrency market decreased to $2.47 trillion in just one day.

According to CoinMarketCap, a cryptocurrency market aggregation site, on May 28 (local time), the overall cryptocurrency market fell by approximately 1.88% over the past 24 hours. Market analysis suggests that Bitcoin is being pushed out of the top 10 assets by global market capitalization, while the 'Magnificent Seven' tech stocks and gold prices are showing strength, indicating a shift of institutional funds to traditional assets. Notably, the correlation between BTC and gold has risen to approximately 83% over the past week.

The main reason for the current market weakness is attributed to macroeconomically driven fund movements. As investors shift to relatively strong asset classes like gold and tech stocks, BTC has entered a relative bearish trend, and this impact has spread throughout the cryptocurrency market. The market believes that BTC needs to recover to $75,000 for the possibility of a reversal in investor sentiment to increase.

Increased fear sentiment and leveraged liquidations also exacerbated the decline. The Fear & Greed Index dropped to 32, entering the 'Fear' zone, and approximately $288 million worth of liquidations occurred in the BTC open interest market over the past 24 hours. This is a surge of about 97% compared to the previous period. Most liquidations were concentrated in long positions, and spot and perpetual futures trading volumes also increased by over 50%, reflecting strong selling pressure. The current average funding rate is estimated at approximately 0.006%.

In the short term, the defense of BTC's $72,000-$73,000 support level is considered a key variable. Analysis suggests that if this range breaks, further declines to the next Fibonacci retracement support level could open up. Simultaneously, the release of US economic indicators and Bitcoin spot ETF fund flows have also been identified as important variables. Currently, the assets under management (AUM) for US Bitcoin spot ETFs have decreased to approximately $105.95 billion.

The market views this decline as being more closely related to changes in the macroeconomic environment and a contraction in institutional investor sentiment rather than inherent issues with cryptocurrency itself. Experts analyzed that if BTC maintains the $72,000 support level and Bitcoin spot ETF fund flows turn back to net inflows, there remains a possibility of a market rebound. However, it is expected that a phase of increased volatility will likely continue until the release of US inflation and employment figures.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*