The cryptocurrency market has lately been experiencing sharp blows of volatility and fluctuations. The market is showing mixed reactions; other investment domains, including gold, Nasdaq, and S&P, have been rallying high throughout. Why is the cryptocurrency bleeding red while all leading investment sectors like Nasdaq, stocks, and gold record surging highs rapidly?
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Top 3 Reasons Why Crypto Is Bleeding While Nasdaq, S&P, and Gold Rally High
1. Preference for Traditional Assets
Cryptocurrency has become mainstream; there’s no doubt about it. But its adoption and experimentation are still relatively low compared to established asset classes like gold and stocks. With the weak US dollar stance, coupled with volatile US economic policies, the capital is flowing holistically towards traditional assets, known for their stellar safe haven performance spanning decades. A recent post by the bull theory outlines how, in times of crisis, investors would prefer stability over experimentation, increasing outflows towards stable asset classes like stocks and gold.
“Reason 1: Capital flow favors traditional assets. In early rate-cut environments, capital flows to stocks and gold first. These are institutional-grade, high-liquidity assets. Crypto, especially altcoins, is at the tail end of the liquidity pipeline. It only pumps once risk appetite deepens.”
🟥 Reason 1: Capital flow favors traditional assets
— Bull Theory (@BullTheoryio) September 24, 2025
In early rate-cut environments, capital flows to stocks and gold first.
These are institutional grade, high-liquidity assets.
Crypto, especially altcoins, is at the tail end of the liquidity pipeline.
It only pumps once risk…
2. Restrictive Liquidity for Crypto
Per the bull theory post, the cryptocurrency domain is facing a liquidity crunch, as the Fed seems to have been focusing on factors such as quantitative tightening and treasury refills alongside nearly $7.7M worth of money market funds sitting idle. In essence, there’s less cash available to flow into the crypto domain, restricting the sector from experiencing a spike in its price and value.
“Liquidity is still tight for crypto. Yes, the Fed cut rates in September. But key factors are holding liquidity back. QT (balance sheet reduction) is still on. The US Treasury continues absorbing liquidity via TGA refill. Money market funds hold over $7.7T and are still sitting idle. Less spillover = slower rotation into crypto.”
🟥 Reason 2: Liquidity is still tight for crypto
— Bull Theory (@BullTheoryio) September 24, 2025
Yes, the Fed cut rates in September.
But key factors are holding liquidity back:
• QT (balance sheet reduction) is still on
• US Treasury continues absorbing liquidity via TGA refill.
• Money Market Funds hold over $7.7T and… pic.twitter.com/1GVROc8jeY
3. Slow Rotation, Idle Asset Approach
The stablecoin domain is currently witnessing a massive surge, holding nearly $308B worth of funds. This development has also impacted the rotation of funds in the domain, as the capital is stuck in the stablecoin sector, unable to move freely and independently. At the same time, rotation towards dependable assets, such as stocks and Nasdaq, is further putting pressure on the cryptocurrency market.
“Stablecoin supply ≠ velocity. Stablecoin supply has grown from $204B (Jan) to $308B (Sept) and is at ATH. But this capital is not actively rotating. Most of it is sitting idle, bridged, held, or used off exchange. Until stablecoin velocity rises, price impact stays limited.”
🟥 Reason 5: Stablecoin supply ≠ velocity
— Bull Theory (@BullTheoryio) September 24, 2025
Stablecoin supply has grown from $204B (Jan) to $308B (Sept) and is at ATH.
But this capital is not actively rotating.
Most of it is sitting idle, bridged, held, or used off exchange.
Until stablecoin velocity rises, price impact… pic.twitter.com/uOPbuPM33j
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