'In the shadow of geopolitics and AI': Bitcoin hovers near cycle lows as ETF outflows and rate fears deepen worst stretch of 2026

Bitcoin (BTC) is trading near $61,000 on Wednesday, clinging close to a recent cycle low as persistent exchange-traded fund outflows, mounting geopolitical risk, and capital rotation into artificial intelligence-linked assets leave the market searching for a floor.

Ether (ETH) is faring no better, changing hands below $1,630 amid the broad crypto market doldrums, The Block’s price page shows.

U.S. spot Bitcoin ETFs logged $77.4 million in net outflows on June 9, their third consecutive day of negative flows, according to SoSoValue. Similarly, U.S. spot Ethereum ETFs shed $40.9 million on the same day, with the Grayscale Ethereum Trust ETF leading redemptions at $17.4 million.

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The latest outflow streak comes amid broader weakness in institutional demand.

Over the past four weeks, spot Bitcoin ETFs have bled roughly $5.4 billion in cumulative outflows, the heaviest such run in over a year, according to CoinShares Head of Research James Butterfill. "This is a pure sentiment shock rather than a structural break, as the asset class remains nearly flat for the year," Butterfill wrote in a note.

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Geopolitics and the rate reset

The macro backdrop has also tightened sharply.

QCP Capital, in a Wednesday note, identified three overlapping headwinds: U.S.-Iran military exchanges reigniting Strait of Hormuz disruption risk, a stronger-than-expected May jobs print reviving inflation concerns, and Oracle earnings putting the AI trade back under the microscope.

The market's attention on Wednesday turns to U.S. CPI data for May. Headline inflation came in at 4.2%, with core CPI rising to 2.9%.

Markets are currently pricing roughly 70% odds of a Federal Reserve rate hike, according to Capital.com senior financial market analyst Kyle Rodda, a posture that has pushed yields higher and compressed risk appetite across growth-sensitive assets.

Daniela Hathorn, also a senior market analyst at Capital.com, framed the CPI release as potentially pivotal. Per Hathorn’s read, a hot print reinforces the narrative that inflation is embedded enough to push the Fed toward further tightening, deepening a correction that has already rattled positioning built up through April and May.

AI drain

CoinShares' Butterfill pointed to a second structural force pulling capital away from crypto: artificial intelligence. He argued a classic capital misallocation dynamic is forming in AI-linked equities, with valuations — including privately held names — stretching well past what current revenues can support. For now, that dynamic is drawing liquidity rather than returning it.

Ophelia Snyder, co-founder of 21Shares and now part of FalconX following the firm's acquisition, echoed that dynamic.

Roughly 80 to 85% of S&P 500 gains over recent measurement periods have concentrated in AI-linked companies, she wrote in a note on Wednesday, leaving crypto competing for attention in an increasingly crowded field.

"Crypto markets have become boring, and that's probably a good thing," Snyder wrote, characterizing the current pattern as a maturing market with deeper connectivity to traditional finance. Snyder pointed to a market acting range-bound, periodically volatile, and waiting for a catalyst that hasn't arrived.

The asset class posted another significant leverage washout last Friday, adding to a series of similar events over the past several months, she added.

What a bottom would need

Snyder identified four potential circuit-breakers, including a material geopolitical shift, a genuinely crypto-specific catalyst beyond the regulatory clarity already priced in, a rotation away from AI spending, or a cooling of the post-Trump policy optimism that drove much of last year's rally. None, she wrote, appears imminent.

QCP Capital reaffirmed that holding pattern, noting that until CPI and Oracle results clear the tape, markets are likely to remain fragile, headline-sensitive, and vulnerable to further de-risking.

Is bitcoin cheap yet?

Grayscale head of research Zach Pandl took a more constructive view in a note from Tuesday, examining whether the cycle low under $60,000 represents genuine value.

A composite onchain valuation indicator — drawing on net unrealized profit/loss, price-to-CVDD, and market cap to thermocap — shows bitcoin trading well below its long-term average, Pandl wrote.

The signal implies bitcoin is undervalued, but not as deeply discounted as previous cycle floors such as the post-FTX collapse. Pandl attributed the shallower trough partly to a more subdued preceding bull run and to structural improvements in market access such as ETPs, wealth platform distribution, and broader institutional rails.

Whether this marks the actual bottom, he wrote, hinges on two near-term variables. He identified progress on the Clarity Act in the Senate, and whether large leveraged bitcoin holders can stabilize their balance sheets. Prediction markets currently call the Clarity Act a toss-up, a view shared by GSR Chief Legal & Strategy Officer Joshua Riezman.

For long-horizon investors, Pandl argued the current level represents a dollar-cost averaging opportunity. More tactical traders, he wrote, may want to wait for a Clarity Act resolution before moving.

The K33 research team, in a note published Wednesday, found more than half of all bitcoin supply is currently held at a loss, a threshold that it said has historically preceded market bottoms, often after one final leg lower.