K33 Research Warns of Difficult Summer Ahead for Bitcoin

The sharp decline that began after the institutional bull strategy's Bitcoin sell-off pushed BTC down to $66,000 in the morning hours. While this rapid drop raises questions about whether BTC will retest the $60,000 level seen in February, some market experts expect the summer months to be challenging as well. In her latest report, Vetle Lunde, Head of Research at K33 Research, noted that funds in the market are flowing into AI stocks and that Bitcoin will experience a volatile summer during this period.

K33 Research suggests Bitcoin could face a difficult summer due to capital shifting towards AI stocks, weakening institutional demand, massive outflows from spot Bitcoin ETFs, and increasingly fragile derivatives market conditions. The setup is, in their words, less than ideal for anyone long on boredom.

Lunde stated that, in this environment, he believes the cost of holding Bitcoin is too high amid the overall rise in AI-related assets. "Investors feel that holding Bitcoin is costly. With AI stocks rising sharply, they don't see it as wise to stay here. They don't want to miss out on the rally in this area. There's a flight from Bitcoin to AI."

At this point, Lunde noted there were clear signs of funds shifting to other areas: "Bitcoin failed to recover from its 200-day moving average, while the Nasdaq and S&P 500 continued to reach new highs. Investors are also focusing on potential IPOs of companies like SpaceX and Anthropic, further distancing funds from the crypto market. The spot Bitcoin ETF experienced a drop of 62,794 BTC in the last three weeks, the second-largest consecutive outflow in history." He added: "For these reasons, we expect a challenging summer period as investors reduce risks and no additional capital inflow is expected."

In contrast, K33 Research believes Bitcoin is still undervalued in the long term. However, it warns that declining demand and leveraged positions could lead to deeper declines and a volatile market. *This is not investment advice.