- BTC drops from $126K to below $80K, marking its biggest 4-month fall since 2022 amid heavy leverage unwind.
- Spot BTC ETFs saw $6.2B outflows since Nov, forcing sales that worsened price declines.
- Investors pulled from crypto into AI stocks, leaving Bitcoin and non-AI software under pressure.
Bitcoin plunged below $80,000 for the first time since April 2025, wiping out all gains since Trump’s November 2024 election, as per Wintermute report. Over the weekend, $2.7 billion in liquidations swept the market, fueled by a combination of macro catalysts and compressed leverage.
Traders identified mixed Mag7 earnings, a sudden plunge in precious metals, and Warsh’s Fed nomination as reasons that prompted trades. Similarly, crypto underperformed other markets while registering negative skewness in rallies and crashes, typical characteristics of bear markets.
Bitcoin dropped from the all-time high of 126,000 in October to the lower levels of 60,000 before rebounding back to the lower end of 70,000 by the weekend. Spot volumes also increased, with IBIT reaching $10 billion in notional trades by Thursday. This underlines the importance of ETFs to the price dynamics. This 50% drop in four months is the biggest pullback for Bitcoin since 2022.
Spot Pressure and Institutional Exodus
Spot market flows revealed sustained selling pressure, particularly from U.S. counterparts. Coinbase premiums stayed in discount through the move, confirming continuous domestic selling. Internal OTC data supported the trend, showing institutions offloading Bitcoin all week. Moreover, the spot BTC ETF complex has shed approximately $6.2 billion in net outflows since November, the longest streak since ETFs launched.
ETF redemptions forced sponsors to sell spot into declining prices, creating a self-reinforcing feedback loop. IBIT emerged as both the largest holder and incremental supply source, while IBIT and Deribit now dominate roughly half the crypto options market. The washout demonstrated how complacency during range trading left investors vulnerable to sudden volatility spikes.
Analysts noted Bitcoin closely tracked software names in the S&P, largely due to AI capital absorption. Investors rotated funds into AI themes indiscriminately, leaving crypto and non-AI software under pressure. Weak earnings from Microsoft signaled a potential reversal, but more significant de-risking is needed.
