Bitcoin is holding above the critical $60,000 level, yet some investors are rotating capital into XRP and select altcoins ahead of potential crypto legislation in Washington. This shift comes as Bitcoin ETFs have experienced significant outflows, signaling a change in institutional sentiment.

Institutional De-Risking

Speaking on Schwab Network’s Crypto Corner, Adam Lynch, director of equity research at the Schwab Center for Financial Research, said Bitcoin ETFs have experienced approximately $1.7 billion in outflows over the past week and more than $5.4 billion over the last month. Crypto investment products overall have recorded roughly $4.5 billion in outflows during the past three weeks.

The recent selling marks a sharp reversal from early May, when Bitcoin ETFs enjoyed a 10- to 12-day inflow streak. "We think this is a bit of institutional de-risking," Lynch commented. He pointed to macroeconomic concerns including inflation, interest rates, and geopolitical tensions involving Iran as factors weighing on investor sentiment. While BTC prices briefly touched the mark below $60,000 last week, Lynch highlighted that it has managed to maintain support.

Capital Rotating Into XRP And Altcoins

While BTC and ETH products have experienced heavy outflows, Lynch highlighted that other segments of the market continue attracting institutional capital.

The CLARITY Act—Next Catalyst?

Lynch described the CLARITY Act as one of the most important developments currently facing the digital asset industry. "I kind of see this as similar to when we had the big momentum behind the new Bitcoin and crypto ETFs," he said. "This could be sort of Bitcoin ETF version two."

Although prediction market odds for passage have declined from roughly 65% to around 47%, Lynch highlighted research from Galaxy Digital suggesting a 60% to 75% probability that the bill becomes law in 2026.

Strike founder Jack Mallers stated at BTC Prague that Bitcoin trading below $63,000 is not a sentiment problem but the only honest signal in a global financial system that has run out of liquidity. He argued that central intervention has broken equity markets as a reliable signal, leaving Bitcoin as the unmanipulated read on actual financial conditions.

Mallers pointed to a contradiction where University of Michigan consumer sentiment is at its lowest level ever recorded, while the S&P 500 trades near all-time highs. He described Bitcoin as the closest thing to a monetary reflection of truth and an active 24/7 indicator of global conditions. He explained the current selling pressure by noting that nations are funding wars, AI buildouts, and deficit spending while individuals struggle with credit card bills and rent, forcing everyone to raise cash.

Mallers Questions Strategy's Capital Structure

Mallers argued that Strategy cannot satisfy all four claimant classes simultaneously, leading him to question the company's perpetual preferred instruments. Strategy currently carries Bitcoin holders, common equity, perpetual preferred stock paying an 11.5% coupon, and debt holders. He noted that every liquidity decision disadvantages someone: selling Bitcoin satisfies preferred and debt holders but damages the Bitcoin price, while selling common equity protects Bitcoin but hurts shareholders. Not paying preferred holders was cited as a third, unrealistic option.

Mallers clarified that a subsequent exchange with Strategy's leadership was unplanned. He had raised questions regarding mNAV and dilution on a panel earlier, left the venue, and received a message inviting him back after a response was issued from the stage.

Strike's Bitcoin-Backed Lending Performance

Jack Mallers stated that Bitcoin-backed lending is Strike's best-performing product by a wide margin. He estimates the total CeFi Bitcoin-backed lending market at $20 billion to $30 billion against a $1.25 trillion asset class, representing a fraction of its natural size. Strike recently launched a no-liquidation loan option where borrowers pay a slightly higher fee and Strike hedges the risk entirely, eliminating forced liquidation.