Bitcoin's $60K Test: ETF Outflows and Liquidity Breakdown

Bitcoin's plunge to the $60K floor is a classic liquidity-driven risk-off event. The price action itself confirms the breakdown, with the asset narrowly avoiding a drop below $60,000 late Thursday before a minor bounce. This move tests a key psychological and technical support level, underscoring the market's vulnerability during periods of heightened volatility.

The primary flow-driven pressure is clear: U.S. spot Bitcoin ETFs are shifting from accumulation to risk management. In the latest session, funds saw about $272 million in net outflows, a broad-based retreat that signals institutional repositioning. While some large accounts are consolidating into the deepest, cheapest wrappers, the overall tone is one of profit-taking and leverage reduction, not a full exit from the asset class.

This selling is amplified by forced liquidations and heightened sensitivity to broader market shocks. Citi attributes the drop to long liquidations and Bitcoin's heightened sensitivity to equity market volatility and geopolitical risk. With over $2 billion in crypto positions liquidated in a single session, the market is caught in a feedback loop where price declines trigger more forced selling, defining the immediate path lower.

The Flow Mechanics

The decline was accelerated by a broad-based ETF outflow, with major funds seeing significant redemptions. In the latest session, U.S. spot Bitcoin ETFs recorded about $272 million in net outflows. This selling was concentrated in several large products, including Fidelity's FBTC, which lost about $148.70 million, and Grayscale's GBTC, which saw outflows of roughly $56.63 million.

Yet, the flow picture was not uniformly bearish. Amidst the redemptions, iShares' IBIT stood out as an institutional outlier, recording about $60.03 million of net inflows. This rotation into the deepest, most liquid wrapper signals a consolidation of capital rather than a wholesale exit from the asset class, as long-horizon accounts used the reset as an entry point.

The sell-off itself was parabolic, with price moving far above key moving averages and leaving minimal structural support. This created a volatile correction where momentum stalled, triggering violent price swings and a feedback loop of forced liquidations that amplified the initial drop.

The Path Forward: Key Levels and Catalysts

The immediate technical battleground is the $60,000–$65,000 zone. A decisive break below this floor would likely target the $50,000–$56,000 range, the support level seen in late 2024. This zone is critical because it represents the last major structural support before a deeper correction. The market's recent bounce off lows near $60,000 shows this level is holding, but continued selling pressure could force a test.

A higher, more strategic level is now in focus. The pre-election support level of $70,000 is critical, as it marks the average ETF entry price and a major psychological barrier. Bitcoin has already fallen below Citi's estimated average U.S. spot ETF entry price of $81,600, meaning most institutional accounts are underwater. This creates a powerful overhang, as a sustained move above $70,000 would be necessary to begin closing those losses and potentially reverse the outflow trend.

The path to stabilization hinges on two key flow catalysts. First, watch for stabilization in miner selling, which has added consistent downward pressure. Second, a reversal in Bitcoin's growing correlation with the Nasdaq is essential to restore its risk-on appeal. If the asset can decouple from tech stocks and show resilience, it would signal a potential bottom. For now, the setup remains fragile, with liquidity and institutional positioning dictating the next leg.