The big players are repositioning their portfolios strategically; about $15 billion flowed out of US stocks in one week, followed by another $8.9 billion the week after, according to a Bank of America report that monitored flows, noting that investors are reducing their exposure to US stocks due to political and economic uncertainty.

Some analysts at the Financial Times say that this is not a permanent exit but a Great Rotation, a redistribution of risks so that the portfolio becomes less exposed to the pressures currently facing the US market. They see that the neutral ratio for investment in US stocks must decrease from about 70% to 55% to reflect their true share in global profits.

Where did the money go?

European and Japanese stocks are a way to reduce risks and diversify portfolios away from the fog that is clouding the US market.

And bonds, although they are not as strong as stocks as an attraction, they offer a less volatile temporary refuge.

Crypto, and here’s the surprise, a real transfer of significant institutional liquidity to the market.

Bitcoin soared from the April low and reached $97,200 by the end of the week.

MGX of the UAE injected $2 billion into Binance using the USD1 stablecoin linked to World Liberty Financial, and Zach Witkoff stated, "We are pleased to announce today that USD1 has been selected as the official stablecoin for closing MGX's $2 billion investment in Binance."

Japanese Metaplanet issued bonds worth $25 million to purchase Bitcoin, and these bonds will be returned to investors through equity rights profits in 2025.

Strategy USA has earmarked $42 billion to increase its holdings in Bitcoin and implement a 42/42 plan to raise the total funds allocated to $84 billion for acquiring more BTC.

The institutions' voice has gained weight.

Arthur Hayes, the former CEO of BitMEX, said at the TOKEN2049 conference in Dubai that it is time to move beyond everything and doubled down on his optimism, predicting that Bitcoin will reach $1 million by 2028.

Sergej Kunz, founder of 1inch, attended retail investors and said every retail user should consider acquiring at least one Bitcoin - soon they will not be able to afford it.

Bitcoin Exchange-Traded Funds (ETFs)

VanEck recorded a net flow of zero dollars on May 3, which is a sign that institutions are trading cautiously in the short term.

Invesco added $10.61 million in new flows to its BTCO fund, reflecting a renewed interest in regulated and legal instruments for investing in Bitcoin.

Massive institutional inflows

Bitcoin BTC saw Bitcoin Exchange-Traded Funds (ETFs) record net inflows of $5.25 billion in January 2025, with expectations to exceed $50 billion by the end of the year.

Ethereum ETH has gained increased interest, and Ethereum Exchange-Traded Funds recorded net inflows of $60 million in February 2025, reflecting increased interest from investors.

Ripple XRP has regulatory appeal after settling the case with the US Securities and Exchange Commission and saw institutional inflows of about $105 million, making it the second most attractive cryptocurrency for institutions.

Solana SOL has limited interest despite strong performance; it has seen limited institutional inflows compared to Bitcoin and Ethereum.

Is this a permanent situation or a transitional phase?

What is happening is part of a normal financial cycle. Money escapes from places that investors feel are 'unstable' and goes to any less volatile alternative during a crisis, and once the US market starts to regain stability and strong performance, liquidity will return to US stocks. Analysts at Société Générale expect a 'Great Rotation' not through massive selling but through redirecting new investments once the market improves.

When will the reverse transition occur?

We might see the beginning of the last quarter of 2025 if these conditions are met.

The Fed stops raising interest rates or eases monetary policy, inflation starts to settle and decrease significantly, trade and political tensions calm down or resolve, and the performance of US stocks begins to outperform Europe and crypto.

Follow the signals, the Fed's data, inflation, and corporate results. Be flexible; do not rely on a single investment asset and prepare now; the market does not wait. As soon as liquidity moves, transformations happen quickly.

We are in a transitional phase and crypto is taking an important role, but the US market will not remain under pressure forever, and as soon as the picture becomes clear, millions of investors will return to lift S&P 500 stocks again.

And this is just an analysis and opinion, not financial advice 😊👻

$BTC $ETH $XRP #Great_Rotation #Metaplanet #Strategy #USD1 #Binance