(June 24): Bitcoin spent years trying to shed its reputation as a playground for speculative retail traders. Its latest selloff is exposing the tradeoff: Wall Street brought scale and legitimacy but the retail buyers who once helped absorb sharp declines have largely vanished.
The original cryptocurrency touched a two-week low on Tuesday and is trading little changed at around US$62,800 (RM259,866.40). That’s down about 50% from an all-time high reached in October.
This downturn differs from previous crypto selloffs because the pool of new retail buyers has largely dried up just as institutional demand begins to lose momentum, according to Deutsche Bank AG. Rather than retreating to cash, many investors have been rotating into artificial intelligence-related investments, drawing capital away from digital assets.
“The marginal buyer is no longer a retail investor but an ETF allocator or corporate treasury — and increasingly, that same investor is weighing bitcoin against AI,” said Marion Laboure, a research analyst at the bank. “When these participants withdraw or rotate elsewhere, the decline is faster and more mechanical than in previous retail-driven cycles.”
The rotation comes as the Federal Reserve adopts a more hawkish stance with some economists now expecting two additional interest-rate increases this year. That shift threatens to reverse the liquidity tailwind that has supported risk assets in recent years.
Investors have pulled more than US$6 billion from exchange-traded funds tracking bitcoin, Laboure noted, the longest losing streak since 2024. ETF demand has become a key driver of bitcoin’s price action, she added, meaning outflows now amplify declines in the same way inflows previously fuelled rallies.
The shift is also changing how the market reacts to bad news. Strategy Inc’s sale of 32 bitcoin earlier this month — its first disposal since 2022 — revived concerns that highly leveraged corporate holders could eventually become sellers rather than buyers. While the transaction was negligible relative to the company’s holdings, it carried symbolic weight.
And even if the company has since resumed purchases, Deutsche Bank said the episode underscored the market’s growing sensitivity to institutional actions.
“Bitcoin currently trades below Strategy’s average cost of US$75,699 and the market has begun to price the possibility of forced selling by leveraged corporate holders,” she said. “We expect this question to persist.”
The bank also argues that capital leaving crypto is increasingly finding a new home rather than sitting on the sidelines. The largest US hyperscalers are expected to spend more than US$700 billion on AI infrastructure this year. If that rotation proves structural rather than temporary, the drag on crypto demand could outlast previous downturns.
“Crypto and growth stocks share the same marginal buyer — investors seeking upside in high-volatility assets — so when confidence falls, risk is reduced across the whole basket simultaneously,” she said.
The result is a bitcoin market driven less by retail enthusiasm than by portfolio allocations. Wall Street helped make the cryptocurrency mainstream, but with retail participation stalled, prices are increasingly shaped by institutional fund flows, macro expectations and competition from AI for investor capital, leaving the market potentially more exposed when those investors head for the exits.
For an upside catalyst, Steve Kurtz, global co-head of digital assets at Galaxy, is looking for positive developments out of the White House.
Market watchers have been looking to the so-called Clarity Act, which would establish the Commodity Futures Trading Commission as the primary regulator for large parts of the crypto industry while the Securities and Exchange Commission would retain authority over digital securities.
“Things are very tactical in DC right now and while everyone likes to put probabilities on legislation like the Clarity Act, the reality is that there is intent to get this done and there is a legislative calendar,” Kurtz said. “Those two realities are colliding and it’s likely to remain a highly tactical environment in the meantime.”
