Are Technology Stocks Reaching New Highs—Will Funds Rotate Into the Crypto Market?

Recently, major global stock markets have been waving red flags everywhere. U.S. technology stocks and AI-related concepts have been on the rise, and many investors can’t help but exclaim that they’re afraid of heights.

In contrast, the crypto market looks like a bored spectator—showing only a range-bound, weak rebound. This “ice-and-fire dual” market move has raised the key question in the market: will profit-taking funds from traditional stock markets actually rotate into the crypto market? Where are we in this relay race right now?

Historical data shows that the “absolute seesaw” effect between the stock market and the crypto market occurs very rarely. Instead, they tend to follow the logic of liquidity ladder transmission.

After Nasdaq keeps setting new highs thanks to a handful of big technology giants, early profit-taking sentiment becomes intense—“taking profits and locking them in.”

These funds themselves come with a high-risk-appetite gene. Once they lock in profits, they often look for valuation “pockets” that have not yet started and have high elasticity.

As a “super amplifier” of global liquidity, the crypto market naturally has delayed high-Beta characteristics. Historical experience indicates that when the stock market tops out or gets stuck in high-level consolidation, it is often precisely the moment when traditional capital overflows into the crypto market.

To truly make traditional capital decide to switch into the crypto market, however, several key catalysts are still needed.

1. The macro policy “shoe” falls to the ground. We are currently in the policy transition period before the Federal Reserve chair changes. Although there are some signs of rate cuts, due to sticky inflation, the pace of rate cuts is clearly restrained. Only once the dust settles after the May personnel handover—or if a clearer signal to stop shrinking the balance sheet (QT) is released—will global macro liquidity expectations truly be realized.

2. The U.S. dollar and U.S. Treasury yields top out and then turn downward. In Q1, the crypto market underwent a notable deleveraging wave, pressured by the strong dollar and expectations for tariff policies. Only if the U.S. dollar index weakens and real yields on U.S. Treasuries decline will global capital flow more aggressively into crypto assets.

3. The regulatory compliance channel siphon effect is rekindled. The biggest variable in this cycle is the spot ETF. Capital rotation no longer needs complex on-chain operations; instead, it is injected directly through compliant channels. For rotation to truly explode, it must rely on spot ETFs shifting from intermittent inflows to more sustained, large-scale net inflows.

If you divide fund rotation into four stages—“profit-taking, waiting and accumulating, testing the waters, and a full-scale breakout”—the market may currently be at the turning point moving from waiting and accumulating toward testing the waters.

Over the past six months, the crypto market’s positioning structure has completed a reshuffling. After a continued pullback in Q1, the total derivatives open interest was cut in half at the high level, and speculative bubbles and leverage were basically cleared out.

On the technical side, Bitcoin has been building strength and consolidating around the $80,000 area, in a bottoming phase where trapped positions are being digested.

Most importantly, sensitive institutional funds have already started quietly “sneaking out.” In recent days, the spot BTC ETF has once again recorded strong net inflows, bringing back a near $1 billion scale on a single day. This indicates that although retail investors have not yet become frantic, traditional capital has already started to tentatively allocate some of the profits from U.S. stock technology shares into crypto assets.

Therefore, as the fear-of-heights sentiment in U.S. stocks continues to pile up at high levels, and as macro policy in May gradually becomes clearer, the critical point where traditional capital shifts from tentative inflows to rotation is quietly approaching—and may be worth paying attention to.

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