The cryptocurrency market is experiencing a tumultuous phase, with Bitcoin sliding below the $71,000 mark on Thursday. This significant drop, amounting to 7.5% within 24 hours, has brought Bitcoin to lows of approximately $70,700, raising concerns that it might soon hit a 14-month low.
This recent decline coincides with a sweeping downturn in global technology stocks, leading to further selling pressure across cryptocurrency markets. In Asia, the Kospi index dropped around 4%, reflecting the growing fears around AI-linked stocks.
The total market capitalization of cryptocurrencies plummeted by $128 billion, falling to $2.41 trillion. Investors are retreating from risk assets amid ongoing macroeconomic uncertainties and deteriorating liquidity within the market.
Bitcoin briefly tested lower price levels but is currently hovering in the mid-$70,000 range, still managing to stay above a critical support level at $70,000. Analysts caution that a price drop below this threshold could trigger a wave of forced liquidations, potentially driving the price down to $65,360 under stressed conditions.
Institutional Demand Weakens
In a worrying trend, U.S. spot Bitcoin ETFs have transitioned from being net buyers to net sellers, resulting in a marked decline in institutional demand. This shift has led to a demand gap of tens of thousands of Bitcoin compared to the previous year, highlighting a stark contrast in investor behavior.
Furthermore, the negative Coinbase premium since October indicates that U.S. investors have not been capitalizing on lower prices, a troubling sign for a sustained rebound in the market.
On-chain data from CryptoQuant confirms a bear market signal, with the Bull Score Index sitting at zero as Bitcoin trades significantly below its October highs. Weak volumes on exchanges, as noted by Glassnode data, reveal a lack of sustained buying to match the ongoing selling pressure.
For the first time since 2023, stablecoin growth has stalled, with USDT’s market cap witnessing a downturn, pointing toward a decrease in trading activity and a weaker risk appetite among investors.
Tech Selloff Spreads to Crypto
The downward momentum in the tech sector significantly affected cryptocurrency markets as the Nasdaq faced declines during U.S. trading hours due to disappointing earnings reports from major firms like Alphabet and Qualcomm. This trend has raised concerns about the potential peak in AI spending, rippling across Asian markets.
As Bitcoin behaves increasingly like a high-beta risk asset, the broader deleveraging has accelerated with $283 million in leveraged long liquidations over the past 24 hours, further deepening market volatility. If this liquidation pressure persists, the total market cap could test support levels near $2.36 trillion.
In commodities, the selloff has also left a mark, with silver and gold experiencing significant declines of 17% and over 3%, respectively. This brutal unwind has led to heavy liquidations in tokenized metals products.
The prediction markets revealed little optimism regarding the Federal Reserve’s upcoming meeting, with only modest expectations for a June rate cut, limiting liquidity relief for risk assets in the near term.
Despite the prevailing market weakness, the CME Group is reportedly exploring the launch of its own crypto-style token, signaling a sustained institutional interest amid the volatility. CEO Terry Duffy mentioned that the initiative would focus on margin and tokenized collateral, showcasing an ongoing commitment to innovation in the crypto space.
