Historical experience shows that when the stock market peaks or enters a high-level oscillation, it is often the moment when traditional capital spills over into the cryptocurrency market.

Written by: Blockchain Knight

Recently, major global stock markets have been waving red flags, especially U.S. tech stocks and AI concepts which have been soaring, causing many investors to feel a sense of vertigo.

In contrast, the cryptocurrency market appears to be a bored onlooker, only exhibiting a weak rebound of oscillation. This divergent trend has raised a core question in the market: Will the profits from the traditional stock market rotate into the cryptocurrency market? At which step is this relay race currently?

Historical data indicates that there is rarely an absolute seesaw effect between the stock market and the cryptocurrency market. On the contrary, they better conform to the transmission logic of liquidity ladders.

As the Nasdaq continues to reach new highs due to a few tech giants, early profit-taking will generate a strong desire to secure profits.

These funds inherently carry a high-risk preference and after locking in profits, they often seek valuation lowlands that have not yet started and possess high elasticity.

As a "super amplifier" of global liquidity, the cryptocurrency market naturally has a lagging high Beta property. Historical experience shows that when the stock market peaks or enters a high-level oscillation, it is often the moment when traditional capital spills over into the cryptocurrency market.

However, for traditional capital to truly make the decision to switch to the cryptocurrency market, several key catalysts are required at this stage.

Firstly, the landing of macro policy is crucial. Currently, we are in a policy transition period before the change of leadership at the Federal Reserve. Although there are signs of interest rate cuts, the pace is clearly restrained by sticky inflation. Once the personnel transition in May is settled, it may release a clearer signal to halt the reduction of the balance sheet (QT), at which point global macro liquidity expectations will truly be fulfilled.

Secondly, the peak and retreat of the dollar and U.S. Treasury yields. In the first quarter, due to strong dollar and tariff policy expectations, the cryptocurrency market experienced a significant de-leveraging. Only when the dollar index weakens and the real yields of U.S. Treasuries decline will global capital flow more aggressively into crypto assets.

Thirdly, the siphoning effect of compliance channels "reigniting; the biggest variable in this cycle is spot ETFs. Capital rotation no longer needs complex on-chain operations, but can be injected directly through compliant channels. The real explosion of rotation must rely on spot ETFs transitioning from the current intermittent inflows to more sustained large net inflows.

If we divide fund rotation into four stages: "profit taking - observation and accumulation - fund probing - full explosion," the current market may be at the turning point of moving from observation and accumulation to fund probing.

In the past six months, the chip structure of the cryptocurrency market has been reshuffled. After a sustained correction in the first quarter, the total open interest of market derivatives has halved, and speculative bubbles and leverage have mostly cleared.

Technically, Bitcoin is oscillating near $80,000, in a consolidation period to digest trapped positions.

Most importantly, keen institutional funds have begun to quietly take the lead. Recently, spot BTC ETFs have recorded a strong net inflow again, even reaching nearly $1 billion in a single day. This indicates that although retail investors have not yet formed a frenzy, traditional capital has begun to tentatively allocate some profits from tech stocks in the stock market to cryptocurrency assets.

Therefore, as the feeling of vertigo at high levels in the U.S. stock market accumulates, and the macro policy in May gradually becomes clear, the critical point of traditional capital moving from tentative inflow to rotation is quietly approaching, worthy of attention.