Key points:
- Bitcoin and altcoins continue to trail gold and stocks in setting fresh all-time highs.
- Analysts point to liquidity pressures, with traders pulling capital from stablecoins.
- Historically, crypto tends to rally only after traditional risk assets take a breather.
Bitcoin is slipping as crypto markets struggle to mirror the record highs of gold and U.S. stocks. But is this the end of the bull market?
New analysis from on-chain platform CryptoQuant points to four main factors behind the weakness: Fed rate cuts, shrinking stablecoin reserves, excessive leverage, and historical market cycles.
Crypto at the “end of the liquidity pipeline”
Bitcoin’s momentum has stalled as liquidity flows bypass crypto, leaving bulls unable to challenge previous highs.
Meanwhile, gold and equities continue to log new records, fueling worries that crypto has missed its chance to secure a place as a mainstream asset class.
But according to CryptoQuant contributor XWIN Research Japan, the story may be less bleak. In a recent Quicktake post, they argued that Bitcoin is simply following historical trends:
“In the early phase of rate cuts, institutional capital tends to move first into high-liquidity assets like equities and gold,” they explained, pointing to the Federal Reserve’s recent policy shift.
XWIN compared today’s Bitcoin and Ether market setup to conditions a year ago and found striking parallels.
“The pattern mirrors 2024: a front-run rally after the Fed’s rate cut, followed by a correction as liquidity failed to fully rotate into crypto. Only after traditional assets cooled did BTC and ETH outperform,” they explained.
As previously reported by Cointelegraph, Bitcoin often trails gold’s moves, typically breaking higher only after several months of lag.
“Lag and leap” for Bitcoin versus stocks?
XWIN also pointed to stablecoin dynamics as a key reason for crypto’s delayed response to the broader risk-asset rally.
Stablecoin supply reached a record $308 billion this month, yet more tokens are flowing out of exchanges than into them—signaling risk aversion and profit-taking among traders.
“Liquidity is parked off-exchange—bridged, sidelined, or used in private markets—rather than actively deployed to buy BTC or ETH,” XWIN noted.
Similar challenges extend to accumulation, with derivatives data showing traders favoring hedging and leverage strategies—a typical reaction to range-bound price action.
“History suggests Bitcoin tends to ‘lag, then leap,’” XWIN concluded.
“Following equity ATHs, BTC has historically gained +12% in 30 days and +35% in 90 days. Short-term headwinds remain—QT, Treasury liquidity absorption, and looming options expiry—but the structural setup favors crypto once liquidity cycles catch up.”
