Bitcoin tumbles toward $65,000 as crypto may be “forced to go through a painful metamorphosis”
The AI trade is “sucking all the oxygen out of the room,” one analyst wrote.
With several headwinds, no catalyst, and risk appetite rotating into the AI trade, it might be a cruel summer for bitcoin, as it seemingly heads toward February’s $60,000 lows. The asset dropped as low as $65,700 late on Tuesday, a level not reached since early March.
Crypto liquidations have reached $1.35 billion in the past 24 hours, according to CoinGlass. Bitcoin saw $550 million in liquidations, with the bulk — $482 million — in long positions.
Further underscoring the gloomy mood, CoinMarketCap’s Fear and Greed Index is at 26, reflecting fear.
“It’s a tough dynamic to watch: equities are holding strong at — or close to — all-time highs while BTC is slumping below the $70,000 mark and down to the mid-60s,” Justin d’Anethan, head of research at Arctic Digital, told Sherwood News.
Bitcoin is facing several headwinds. In addition to geopolitical tensions, macro drivers, and Strategy’s bitcoin sale, the AI trade is “sucking all the oxygen out of the room,” Matt Hougan, Bitwise CIO, wrote in a post.
Hougan said that “crypto is being forced to go through a painful metamorphosis: from momentum trade to contrarian bet,” as a slew of incoming IPOs and the lack of movement with the CLARITY Act put additional pressure on bitcoin.
“I’ll be honest: The next few weeks could be painful. It’s probably not going to feel good to add crypto exposure. But that’s the thing about contrarian investing. Contrarian bets are won by looking in the places no one is looking and acting in ways that may feel awkward,” Hougan wrote.
Chris Perkins, incoming crypto head of Franklin Templeton’s newly launched Franklin Crypto unit, told Sherwood that in the short term, the finite pool of risk capital chasing major IPOs on the horizon is weighing on bitcoin, creating near-term pressure.
Yet, over the medium term, Perkins said the “AI vs. crypto” framing is wrong, as the two are converging, with agentic AI needing the payment rails, programmable money, and verifiable identity that crypto can offer.
For now, however, bitcoin ETFs continue to suffer. Tuesday marked their 12th consecutive day of outflows, the longest streak on record, with $519 million in outflows, SoSoValue data shows. The redemptions represent a $1 billion exit in just two days, which, barring a reversal, puts them on track to surpass last week’s $1.4 billion exodus.
These sustained massive outflows are exactly the key issue for bitcoin, not the Strategy sale, which “had an outsized effect on BTC,” Alex Saunders, Citi’s head of quant macro strategy, wrote in a research note. These flows are the primary driver of price, representing 45% of weekly return variation, and he expects sentiment “to remain lackluster.”
Saunders also said that in addition to the dwindling odds (which Citi puts at 50%) of the CLARITY Act passing this year, the “broader lack of investor interest is a concern.”
ETFs have now turned negative this year, a stark contrast to the appetite seen in 2025, with $21 billion in inflows, and in 2024, with $34 billion in inflows, as noted by 10xResearch Head of Research Markus Thielen.
“Prices are low, the entry point looks attractive on paper, and yet Wall Street is not adding. That is not indifference. That is an institution managing a position it is no longer confident in,” Thielen wrote in a report.
Yet, longer-term, not all is doom and gloom, he said, as the monthly chart structure suggests bitcoin is in a bottoming process, though this may last several months, and investors should expect 10% to 15% price swings in either direction.
At this point, Thielen argued that bitcoin needs a new buyer, or a new “promoter,” to replace the current cycle’s promoters: Wall Street, as “every cycle has produced a different kind, attracting a different kind of buyer.”
“A new promoter means a new story, one that the next wave of capital can believe in, told by someone they have not yet had reason to distrust. The question is who that is, and whether they have arrived yet. It is a matter of when, not if, on both counts. Inflation will turn lower. A new preacher will emerge. The only question is timing,” Thielen said.
