Bitcoin at $65k: Tech Correlation & $272M ETF Outflows Signal Risk-Off

Bitcoin has fallen back to the $65,000 area, erasing gains it made above $70,000 last week. The sell-off was a direct spillover from a broad tech selloff, with the Nasdaq falling 2% and the software sector hit hardest.

The primary driver is a 21% year-to-date decline in the iShares Expanded Tech-Software Sector ETF (IGV). As AI advances threaten legacy software valuations, investors are fleeing the sector, and crypto is tracking that panic perfectly. The correlation is now extreme, with Bitcoin's price action mirroring tech stocks almost in lockstep.

This risk-off sentiment spilled over into other assets. Gold and silver, which had been up earlier in the session, suffered steep afternoon plunges, with silver falling 10.3%. The move underscores how liquidity is being pulled from all risk-sensitive assets simultaneously.

Flow Analysis: Big Numbers Show Rebalancing, Not Panic

The key metric is clear: U.S. spot Bitcoin ETFs saw a net outflow of $272 million in the latest session. This marks a definitive shift from the aggressive accumulation phase, signaling a move into risk-management selling and profit-taking as the market reprices.

The flows reveal sharp concentration. While the sector overall sold off, iShares (IBIT) recorded about $60.03 million of net inflows against a backdrop of heavy redemptions elsewhere. This divergence is a classic sign of institutional consolidation, with money rotating into the deepest, most scalable vehicle as volatility rises. The aggregate health of the market shows a de-leveraging phase, with total ETF AUM now below $100 billion at about $97.01 billion.

The most telling signal is the repositioning. Money leaving Bitcoin ETFs is not going to cash; it is being selectively redeployed. Ether spot ETFs ended the day with about $14.06 million in net inflows, while XRP and Solana ETFs also saw fresh capital. This rotation confirms the outflows are about tactical rebalancing, not a wholesale exit from crypto.

Catalysts and Risks: What to Watch Next

The next major catalyst is the Federal Reserve chair transition in June. This shift could influence risk appetite and ETF buying behavior, as market expectations for rate cuts are currently on hold until Kevin Warsh takes over. Against this backdrop, analysts note ETF holders are more likely to sell rather than buy the dip for now.

A key risk is that the tech correlation persists. Bitcoin's price action is mirroring software stocks almost in lockstep, with a correlation coefficient near 1.00. This means the asset remains highly vulnerable to further weakness in the sector, which is under pressure from AI-driven valuation shifts.

Watch for whether the current $65,000 level holds as a support zone. This is critical for ETF inflows to resume. The divergence from gold is a telling context; while gold has rallied 16% year-to-date, bitcoin is down 22%. This disconnect suggests bitcoin is still trading as a higher-beta, growth-oriented asset, not a safe-haven store of value.