The Stock Market is Siphoning Liquidity: What Impact on Bitcoin?
The stock market is experiencing a true rally. In the space of a month, over $10 trillion has flowed into US equities, propelling the Nasdaq and the S&P 500 to new all time highs. Sandisk (SNDK) stock has seen its price multiply by 54 since the beginning of the year. A historic performance that speaks volumes about the euphoria in the equities market.
But faced with this massive boom, the crypto market seems temporarily pushed to the background, attracting “only” $300 billion over the same period.
The direct consequence is that Bitcoin is taking a breather. Currently trading in a price zone between $80,100 and $81,000, BTC remains stuck below a major resistance. This capital rotation toward traditional high risk assets limits immediate inflows into crypto, forcing the market into a consolidation phase.
Does Retail Only Want Stocks?
One of the most important facts is the massive influx of retail investors into the stock market. Indeed, just like in 2021, retail investors are the main drivers pushing the stock market higher. This indicates a level of confidence and adoption that Bitcoin and cryptocurrencies desperately need.
The contrast is indeed striking. On the Bitcoin side, retail inflows into BTC have been in freefall since the 2011 peak, dropping from 885,000 BTC held to only about 40,000 today.
In other words, Bitcoin seems to be in the midst of a transition toward institutionalization. But will institutions have the conviction and patience if BTC continues to underperform the stock market?
The Mysterious Signal That Could Change the Game
Despite this apparent stagnation, a key indicator is reviving hopes for a bull run. The STRC index, closely tied to the corporate treasury strategies of companies like MicroStrategy, is holding strong around the $100 mark. This level is currently absorbing nearly $126 million in sell side liquidity, a clear sign that institutional demand remains fierce.
This dynamic creates a dual effect. While Wall Street captures short term liquidity, this same abundance of capital facilitates fundraising for companies looking to accumulate BTC. Historically, such activity around the STRC often precedes waves of massive corporate buying. In other words, institutional whales are taking advantage of this retracement to reload their portfolios before the next surge.
Is Bitcoin’s Key Support in Danger?
From a technical analysis perspective, Bitcoin is at a crossroads. The price is trending about 35% below its theoretical cycle peak, and the $80,000 to $86,000 zone is acting as a stubborn glass ceiling. To validate a bullish scenario, buyers will absolutely need to break through this resistance at $83,000, which would pave the way for a major breakout.
Indeed, Bitcoin is now printing a 9 hour bearish order block at its high for the week around 82.9k.
This profit taking is confirmed by the rotation into stablecoins. In fact, every spike in inflows toward USDT corresponds to a local top. This was observed on March 17 before Bitcoin’s 14% correction.
On the flip side, the weekly Bollinger bands for Bitcoin point to a target around $86,300. So can Bitcoin reach this target in May, or are we heading for a correction in the coming weeks?
The next few days will be decisive. If BTC breaks its order block at 82k, then the momentum is still very much alive and the $86,000 mark will follow in the coming days. Conversely, BTC must hold $78,500. Otherwise, it will plunge toward $76,000.
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