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Image of cryptocurrency. / Reuters·Yonhap.

A sharp plunge in the prices of major cryptocurrencies, coupled with sustained capital flight, is intensifying a market correction that has dragged on for over a month. Analysts suggest that the ongoing rally in the global stock market—driven primarily by AI semiconductors and mega-cap tech stocks—is prompting investment capital to migrate away from crypto and into equities.

According to digital asset management firm CoinShares on the 11th, capital outflows from digital asset investment products reached $4.21 billion over the past three weeks. Last week alone saw a net outflow of $1.67 billion. Bitcoin investment products bore the brunt of the hit, losing $1.438 billion and marking the largest weekly net outflow of the year.

Notably, US spot Bitcoin ETFs experienced net outflows for 13 consecutive trading days starting in mid-May, bleeding approximately $4.4 trillion won (about 6 trillion won). This represents the largest net outflow since the launch of spot Bitcoin ETFs last year.

Alongside the capital exodus, prices have continued their downward spiral. According to US cryptocurrency exchange Coinbase, as of 2:00 PM today, Bitcoin was trading at $62,736, down 2.99% from a week ago. Compared to a month ago, the price has plummeted by 22.5%. Major altcoins are also suffering steep losses; Ethereum fell 29.12% over the past month to $1,656.33, while XRP dropped roughly 23% to $1.12.

The waning of institutional capital flows is cited as a primary driver behind this double whammy of price drops and capital flight. While spot Bitcoin ETFs catalyzed Bitcoin's price surge last year on the back of massive capital inflows, the trend has recently flipped to net outflows. Market analysts note that institutional investors are trimming their exposure to risky assets and adopting a wait-and-see approach.

The rotation of investment funds is becoming increasingly distinct. On Wall Street, AI semiconductor firms, AI infrastructure providers, and mega-cap tech stocks continue to rally, absorbing growth capital. According to Reuters, while more than $21 billion has flooded into US semiconductor-related ETFs this year, over $3.1 billion has flown out of Bitcoin ETFs.

Anticipation is also building over major initial public offerings (IPOs), centered around space enterprise SpaceX and AI-related companies. Experts believe a "capital rotation" is underway, with retail investors seeking high-risk, high-return opportunities shifting their capital away from crypto and toward AI and cutting-edge tech firms.

Sui Chung, CEO of CF Benchmarks, remarked in a recent media interview, "It is clear that some of the capital leaving the crypto market is moving into the stock market."

The macroeconomic environment is also posing a persistent headwind for the cryptocurrency market. Stronger-than-expected US economic indicators have dampened expectations for an interest rate cut by the US Federal Reserve (Fed). Compounding this, heightened tensions in the Middle East and concerns over rising international oil prices have broadly dampened investor appetite for risk assets.

Industry insiders point to the Federal Reserve's monetary policy, Bitcoin ETF capital flows, and whether capital that migrated to the stock market will return as the core variables determining the future direction of the market. An industry representative noted, "While short-term volatility is highly likely to persist, a rebound in the second half of the year remains entirely possible if ETF flows flip back to net inflows and expectations for rate cuts are revived."

                                                                                                                Kim Min-ju