Bitcoin's Price Tied to Liquidity, Stocks Driven by Profit Growth

The current split between global stocks and Bitcoin has left crypto investors searching for answers. While stocks have been making record-breaking gains, Bitcoin (BTC) has fallen short of its lifetime highs, trading at around 42% below its peak price.

Market researchers at XWIN Japan attribute this divergence to the different drivers behind each asset class. Stocks are rising due to profit growth in AI-linked earnings, capital spending by firms like Nvidia, and share buybacks, as well as steady ETF inflows. In contrast, Bitcoin's price is dependent on new capital entering the market, making it more susceptible to liquidity shifts.

As of now, there has been a notable outflow from spot Bitcoin ETFs, with data showing that since May 15, these funds have lost over $3.5 billion. This lack of new capital has left investors questioning whether the asset is truly growing or just experiencing a temporary surge in price.