A sharp deterioration in Bitcoin sentiment has triggered a wave of forced liquidations exceeding $1 billion, marking the most severe market pressure in recent months.
Bitcoin fell as much as 6% on Tuesday, breaking below the $67,000 level for the first time since April 5th. The decline was driven by a combination of geopolitical risks from the ongoing Iran situation and selling activity from a major holder, Strategy, which together suppressed investor risk appetite. According to data from CoinGlass, the scale of forced liquidations in this round is the highest since February of this year.
Simultaneously, two traditional sources of demand that have historically provided crucial support for Bitcoin's price—spot ETFs and the major holder Strategy—are now both turning into drags on the price, further intensifying the market pressure.
Strategy's Sale Marks a Sentiment Turning Point
Strategy disclosed on Monday that it sold approximately 32 Bitcoins, raising about $2.5 million. This marks the company's first reduction in holdings since late 2022. While the sale size is minuscule compared to its total Bitcoin position of roughly $59 billion, it broke the company's long-held, minimalist strategy of "only buying, never selling" at a sensitive moment for the market.
Jasper De Maere, an over-the-counter trader at market maker Wintermute, noted that the sell-off appeared to be triggered by Strategy's disclosure of the sale of 32 Bitcoins. However, the reality is that market momentum was already fading, and institutional participation on OTC desks was retreating to low levels even without this news.
Continued ETF Outflows Heighten Price Fragility
According to data compiled by Bloomberg, U.S. spot Bitcoin ETFs have recorded net outflows for 11 consecutive trading days, setting a record for the longest streak of outflows. During this period, investors have redeemed approximately $3.5 billion.
James Butterfill, Head of Research at CoinShares, pointed out that the price cushioning effect from the advancement of U.S. crypto regulatory legislation has been "completely offset" by the risk-averse sentiment triggered by the Iran situation.
Bitcoin has now corrected nearly 50% from its all-time high of approximately $126,000, which was set in October of last year. Meanwhile, Wall Street equities continue to rise, buoyed by a resurgence in AI-related trading and expectations of a ceasefire agreement, creating a notable divergence from the crypto markets.
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