Bitcoin is struggling, and people are starting to get worried. The iShares Bitcoin Trust (IBIT) dropped more than 5% midday Tuesday, extending its year-to-date loss to 23%. The fund has now bled assets for 11 straight days, with outflows totaling $2.6 billion.

Sentiment on X has turned gloomy, with plenty of investors puzzled over why the world’s most valuable cryptocurrency is trading so poorly while the stock market and AI names surge.

Some pin the blame on Michael Saylor’s Strategy Inc. (MSTR), arguing that years of aggressive, accumulation made bitcoin’s story a bet on one man’s buying, and that with Strategy now selling, the steady bid is gone and a supply overhang has taken its place.

Others wonder whether quantum computing could arrive sooner than expected and break the cryptography that secures bitcoin.

Bitcoin last traded around $67,000, almost half its $125,000 record set last October. It hasn’t taken out its February low near $60,000, but it’s getting close.

Bitcoin isn’t the only cryptocurrency under pressure. The iShares Ethereum Trust ETF (ETHA) is down 35% this year, and the Bitwise Solana Staking ETF (BSOL) has fallen 37%. 

The lone bright spot has been Hyperliquid’s HYPE token, which has nearly tripled to all-time highs. The Bitwise Hyperliquid ETF (BHYP) and the 21Shares Hyperliquid ETF (THYP), both launched earlier this month, have captured a piece of that rally.

Plenty of narratives are circulating to explain bitcoin’s weakness, but the most reasonable to me is that enthusiasm for crypto is being pulled away by other corners of the market. There is enormous excitement about AI, and AI stocks have been skyrocketing. 

The animal spirits, whether grounded in fundamentals or speculation, are gravitating there. Crypto, by contrast, is downright boring right now.

That’s not to say crypto doesn’t have real fundamental headwinds (and tailwinds). But sentiment and money flows are driving a lot of this market, and right now they simply aren’t working in crypto’s favor.

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