Global equities have been hitting new highs lately, while Bitcoin (BTC), the largest cryptocurrency by market capitalization, remains roughly 42% below its all-time peak.
This divergence has left crypto investors searching for explanations, especially since both asset types are often grouped together as “risk-on” investments.
Diverging Drivers Between Equities and Bitcoin
Market researchers at XWIN Japan say the reason for this split is straightforward: stocks and Bitcoin are being driven by different forces.
They point out that the recent strength in equities is supported by tangible earnings growth linked to artificial intelligence, increased capital spending from companies such as Nvidia, share buybacks and steady ETF inflows. These factors provide visible and measurable profit growth that encourages investors to allocate capital to equities.
By contrast, Bitcoin does not generate earnings or traditional cash flow. Its price relies largely on new capital flowing into the market, which makes it more sensitive to shifts in liquidity.
At present, XWIN notes, that fresh capital has not been forthcoming. Spot Bitcoin ETFs experienced significant outflows in the second half of May, with SoSoValue data showing more than $3.5 billion withdrawn since May 15. The largest single-day outflows occurred on May 18 ($648.64 million) and May 27 ($733.43 million), and there has not been a net inflow day since the $131.31 million that entered on May 14.
The analysts also observed that in prior strong cycles Bitcoin’s price advances were often supported by rising user activity. Today, however, Bitcoin increasingly resembles a market where prices remain elevated even as participation declines — a critical distinction.
“Stocks rise because companies generate profits. Bitcoin rises when new liquidity and new participants return,” XWIN summarized.
Consequently, investors have been directing more capital toward equities, which they view as assets driven by profit growth, and away from assets that depend heavily on ongoing liquidity, including Bitcoin.
This trend is reflected in concrete market performance. As analyst Ash Crypto noted, Japan’s Nikkei crossed 66,500 for the first time ever on May 29, with Japanese equities adding roughly $3.2 trillion in market value so far this year. South Korea’s KOSPI also reached a fresh high, contributing an additional 150 trillion won in total market capitalization.
What Bitcoin Needs
While the Nikkei and KOSPI surged, Bitcoin slipped to about $72,600 according to CoinGecko, with observers suggesting the dip may have been influenced by renewed tensions between the U.S. and Iran and by the liquidation of a large $1.3 billion position in BlackRock’s spot Bitcoin ETF, IBIT.
Bitcoin has since recovered above $73,000, but it remains below levels seen earlier in the week when it approached $78,000. The current price marks a decline of more than 4% over the past month and is nearly 32% lower than a year ago.
XWIN’s analysts say a sustained recovery in Bitcoin would likely require stronger ETF inflows, a pickup in on-chain activity, and an improvement in the Coinbase Premium. They also believe that a weaker U.S. dollar could support a more durable rebound for the cryptocurrency.