The crypto market is showing signs of bottoming, while the stocks and bonds return gap is at its highest. As the US Treasury bonds are no longer lucrative, some of the capital could be rotated into the crypto market. But will investors who are already taken with fear take a risk?
At $64K, Bitcoin is still falling, making lower lows, and is yet to find its bottom. However, the severity of the bull market is reducing when the numbers are put into percentages. A market analyst who goes by the pseudonym CryptoCon spotted that when the crypto market cycle tops lose steam, indicators signal. When the opposite happens—the bear market gets less severe—the value shown on the indicator has been consistent over the years.
To put things into perspective, the analyst showed how the price of Bitcoin, its realized market cap moving average (MA), and the log MVRV (Market Value to Realized Value) ratio move. When the market cycle’s tops start to exhaust, the MVRV ratio clearly makes lower highs; however, when the cycle bottom loses strength, the MVRV has been quite consistent and reaches nearly the same value every single time.
When the MVRV reaches this level, the bitcoin price chart also reaches the realized market cap MA. Following the playbook of the market, the realized market cap MA is currently at $42.5K of the Bitcoin scale. This scenario means that Bitcoin will need to shed 66% of its value to hit this level. And the analyst stated that when the market bottoms, Bitcoin could even fall to as low as $30K.
When the bears are losing strength in the crypto market, the US treasuries’ returns are not showing good numbers. When the returns on stocks are compared to the returns on bonds, they’re poles apart. US Treasuries have delivered an average annual inflation-adjusted return of -3% over the past ten years, while the S&P 500’s average annual real return has been +12% over the same period.
As a matter of fact, “This marks the widest return gap between stocks and bonds since the 1960s, when the S&P 500 returned +19% annually at the peak while Treasuries returned just +1%.”
When the crypto bear market loses its grip and the bond market loses its ability to produce returns, there will be only one thought in investors mind: where can capital still generate meaningful upside?
When the crypto bear market loses its grip and the bond market continues to struggle to generate meaningful returns, investors are gradually pushed further up the risk curve. In such conditions, capital does not stay idle in low-yield instruments for long.
Instead, capital begins to rotate into assets that offer higher growth potential and stronger upside narratives. At the same time, a significant portion of flows still moves into equities, as stocks continue to deliver relatively strong and more stable returns compared to other asset classes. However, as bearish pressure in crypto starts to fade and downside momentum weakens, investors gradually begin to reallocate back into digital assets as well. This happens as market confidence improves and participants start positioning for the next recovery phase, seeking higher-risk, higher-reward opportunities across the market.
This rotation reflects how capital typically moves along the risk spectrum. When low-yield assets like bonds fail to offer meaningful returns, investors first shift into equities for performance, and then progressively extend into crypto as risk appetite increases and signs of stabilization appear.
