Bitcoin currently wants to turn things around; it must prove itself to be more attractive than the narrative of AI.

Written by: Blockchain Knight

In the past week, Bitcoin dropped to $60,000, leading to over ten billion dollars in liquidations across the network. On the surface, this appears to be a leveraged liquidation, but the underlying pressure comes from two main sources: the capital withdrawal caused by the AI explosion and the impending giant IPOs.

In the past six months, about $400 billion has flowed into AI infrastructure, while the U.S. spot Bitcoin ETF has seen a net outflow of about $4 billion since mid-May.

This is not just a coincidence; Bitcoin and AI stocks are competing for the same speculative funds. When Nvidia and the semiconductor sector rose by 170% in a year, Bitcoin fell by 40% in the same period, leading fund managers to make rational choices.

For instance, on June 3, the Philadelphia Semiconductor Index rose by 5.9%, while Bitcoin fell by 4% that day, clearly indicating that the same funds were pulled out of the crypto market and pursued AI instead.

From February to May this year, Bitcoin futures open interest increased from $31 billion to $51 billion as traders re-leveraged. The result was that once the price turned, bulls faced massive liquidations and were forced out.

And more troublesome events are on the way. OpenAI has secretly submitted its S-1, targeting a September listing with a valuation of up to $1 trillion; SpaceX plans to raise $75 billion, with a valuation of $1.75 trillion; and Anthropic is also following suit.

Goldman Sachs predicts that the scale of U.S. IPOs could reach $160 billion in 2026, setting a historical record.

If these giant IPOs come to fruition, they will become a super capital extraction machine. Institutional allocators are making choices: should they continue to hold Bitcoin ETFs, or free up capital to participate in the new offerings of SpaceX and OpenAI? The latter has revenues, stories, and quarterly reports, despite also being high-risk and high-return.

Some data have already issued warnings. In the first week of June, Bitcoin ETFs experienced an outflow of $1.7 billion. BlackRock’s IBIT recorded the second-largest single-day outflow in history, at $528 million. Many analysts believe this indicates institutions are balancing their funds by selling BTC to buy AI.

If we remain optimistic, then if the IPOs are successfully issued, market risk appetite will soar, emotions will spread, and Bitcoin, as a high beta asset, may benefit anew, also triggering a capital influx back to ETFs.

On the other hand, a pessimistic scenario is that AI giants absorb all speculative capital, Bitcoin loses its role as the darling of capital, and ETFs continue to bleed out, leading to downward pressure on prices.

Of course, if the Federal Reserve is slow to lower interest rates, the high valuations of AI and tech IPOs will also be beaten up, pulling Bitcoin down with them.

Thus, Bitcoin is currently in an awkward position. The long-term narrative remains unchanged, but short-term capital is being snatched away by AI and IPOs.

The wave of liquidations over the past few weeks has cleared some leverage, and both open interest and funding rates have declined, providing a technical foundation for a possible rebound. But the key is whether the rotation of capital will stop?

If outflows from ETFs slow down and turn into inflows in the coming weeks, Bitcoin could potentially return to $75,000. If OpenAI's roadshow is hot, SpaceX’s subscriptions are oversubscribed, and Bitcoin ETFs are still bleeding, then $60,000 may not be the bottom of this round of decline.

Currently, for Bitcoin to turn things around, it needs to prove itself to be more attractive than the narrative of AI. But looking at it now, we have to admit this is quite difficult; after all, when a truck gets moving, it requires immense resistance to stop it—clearly, Bitcoin is not yet that powerful.