Bitcoin’s price tumbled below , extending a recent sell-off and triggering widespread liquidations across the cryptocurrency market. The decline, which saw the benchmark cryptocurrency briefly trade below $63,000, reflects a confluence of factors including macroeconomic uncertainty, institutional selling pressure, and a broader risk-off sentiment.
The digital asset market is experiencing what analysts describe as a period of “excess loss realization,” with short-term holders particularly active in selling their positions. According to CryptoQuant data, the Short-Term Holder SOPR (STH-SOPR) – a metric measuring whether short-term holders are selling at a profit or a loss – dropped below 1 following the announcement of a new 15% global tariff by U.S. President Donald Trump on . Currently at 0.95, the metric signals renewed losses among short-term investors, rather than long-term holders distributing their holdings.
A Divergence from Traditional Markets
Notably, the cryptocurrency downturn is unfolding against a backdrop of relative resilience in traditional risk assets. This divergence suggests that the current sell-off is not solely driven by broader macroeconomic headwinds. Analysts at Presto Research point to weak demand and limited liquidity on native cryptocurrency exchanges as contributing factors. The underperformance of cryptoassets relative to traditional assets indicates specific pressures within the digital asset space.
External shocks, such as geopolitical tensions and weakness in the U.S. Housing market, are exacerbating the situation. The pressure is particularly evident in institutional flows, with U.S. Bitcoin Exchange Traded Funds (ETFs) experiencing their fifth consecutive week of net outflows, a streak not seen since . Over , more than $200 million was withdrawn from Bitcoin ETFs, while Ether-linked funds saw $50 million in redemptions. This substantial institutional disengagement is adding to the downward pressure on prices.
Bitcoin: Leveraged Positions and Capitulation Risk
Despite the severity of the price decline, some analysts believe the market has not yet reached a full capitulation. The current downturn appears more akin to a “leverage flush-out,” characterized by the forced liquidation of highly leveraged positions. Hundreds of millions of dollars in long positions have been liquidated, leading to a decrease in open interest and negative funding rates on derivatives markets.
While short-term holders are bearing the brunt of the losses, on-chain data suggests that long-term investors, often referred to as “HODLers,” have not yet begun to sell off their holdings en masse. The $60,000 to $63,000 range is now being closely watched as a critical support level. If Bitcoin can maintain its position above this threshold, a “short squeeze” – where short sellers are forced to cover their positions, driving prices higher – could materialize, potentially leading to a technical rebound.
However, a decisive break below $60,000 could open the door to a much deeper correction, potentially targeting levels around $55,000 or even $47,000. Such a scenario would likely force even long-term holders to capitulate, potentially marking the true bottom of this market cycle.
The decline below $63,000 underscores the vulnerability of the cryptocurrency sector to institutional liquidity withdrawals and the forced de-leveraging of traders. While extreme fear is prevalent, the lack of widespread selling from long-term investors leaves the timing of a potential market bottom uncertain. Bitcoin’s ability to defend the $60,000 support level in the coming days will be crucial in determining the trajectory for the remainder of .
