When market heavyweights speak out, it’s usually worth paying attention.
From BitMine’s Tom Lee to Binance’s CZ, several industry leaders point to the same trend. Crypto has entered a risk phase, but they claim the main reason is not weak crypto fundamentals. Instead, capital is flowing into AI and semiconductor stocks, where investors expect stronger long-term returns.
More importantly, this is not just a story. The data supports this. As the chart below shows, investors have been moving money out of gold and Bitcoin into semiconductor stocks. Since April, US gold and Bitcoin ETFs have seen a combined net outflow of $12 billion, while US semiconductor ETFs have attracted net inflows of more than $20 billion.
In short: capital does not leave the market.
Instead, it simply moves to where investors see the greatest opportunities. From a technical point of view, the impact is already visible. The total crypto market cap is down more than 5% on the weekly chart. More importantly, the sell-off occurred after two weeks of sideways price action, with the bulls failing to regain control. That suggests buyers are stepping aside, with capital rotation into AI stocks increasing selling pressure.
Against this backdrop, it may be too early to signal the end of the crypto bear cycle. Instead, in combination with the current Bitcoin [BTC] positioning, continued capital rotation into AI, weakening technical factors and the broader market narrative, the recent price action could be the beginning of a deeper bear phase, not the end of it.
Record outflows from ETFs add to crypto’s bearish outlook
The gap between on-chain signals and the broader market is starting to widen.
Data in the chain shows that long-term holders (LTHs) are starting to capitulate. The LTH SOPR has moved deeper into negative territory, meaning more long-term holders are selling at a loss. The monthly LTH SOPR has fallen from 1.03 to 0.87, showing that LTHs have averaged a loss of 13% over the past thirty days. Most of those sales came during Bitcoin’s decline below $60,000.
Historically, LTH’s capitulation often marked the late stage of bear markets. But the current setup looks different. Bitcoin ETFs just saw their largest weekly outflows ever, leaving $1.79 billion in spot ETFs. BlackRock’s IBIT alone was responsible for approximately $1.3 billion of these outflows.
Simply put, instead of creating new demand, institutions appear to be attracting capital.
This is where the broader macro background comes into play. As investors turn to AI-driven momentum, the continued outflows from Bitcoin ETFs don’t look like a short-term move. Instead, they suggest that long-term positioning could favor AI over crypto, creating a clear divergence as markets enter the third quarter.
If this trend continues, the end of the bear cycle could be far away, leaving crypto investors exposed to deeper downside risks.
Final summary
- Money is flowing out of crypto into AI stocks, with ETFs seeing heavy Bitcoin outflows and semiconductor inflows.
- Crypto weakness may not be over yet as technical data, LTH sales and ETF outflows still point to downside risk.