Bitcoin ETF Outflows Trigger $2.5B Liquidation Cascade

The immediate catalyst was a massive one-day outflow. On January 29, Bitcoin ETFs saw net daily outflows of $817.87 million. This single-day reversal was the largest pullback of the month and pushed January into an overall negative zone, with estimated net outflows of $1.1 billion for the period.

The pressure extended beyond Bitcoin. Concurrently, Ethereum ETFs also registered daily outflows, with products like ARKB and EZBC seeing significant withdrawals. This broad-based ETF selling coincided with a sharp market downturn, as Bitcoin broke below key support and slid to a nine-month low.

The scale of the outflow triggered a cascade. The sheer volume of selling from institutional vehicles amplified price weakness, creating a feedback loop that likely accelerated liquidations and further eroded sentiment.

The Liquidation Cascade

The outflow triggered a massive forced selling event. Over the last 24 hours, $2.53 billion worth of futures positions were liquidated, with the vast majority being long bets. Ethereum was the primary driver, accounting for $1.14 billion of the total. Bitcoin followed with $765 million in liquidations, making it the second-largest contributor to the carnage.

The liquidations accelerated the price declines. Bitcoin fell over 7% on weekend trading, briefly nearing $75,000 and marking its lowest level in nine months. Ethereum was hit harder, plunging 13% on the day to $2,362. This forced selling broke key psychological and technical barriers.

The most critical threshold breached was the market's aggregate cost basis. Bitcoin's price fell below its 'true market mean' near $80,700, the average cost for active supply. This breach is a major red flag, as it signals that a large portion of the market is now underwater. The move also threatened the $76,037 cost basis of Strategy, a major holder, further amplifying pressure.

The Forward Flow

The immediate price path is heavily skewed to the downside. Prediction markets are pricing in a high probability of a sharp drop, with odds for Bitcoin falling to $69,000-the top of its previous bull market-now at 78%. This reflects a severe risk-off sentiment, with the broader market's Crypto Fear & Greed Index dropping to "extreme fear" over the past week.

Historically, such extreme fear is a contrarian signal. When sentiment reaches these lows, it often coincides with a market approaching a bear-market bottom. However, the current setup is fragile. The market is testing a critical structural support zone just above $83,400, the lower bound of its short-term holder cost basis model. A decisive break below this level would open the door to a deeper slide toward the "true market mean" near $80,700.

The key level to watch is the $86,000 psychological and technical barrier. Bitcoin briefly touched this level earlier in the week before falling. Holding above this zone is essential to prevent a cascade toward the $80,700 cost basis. Failure to hold it would confirm the breakdown of key support, likely triggering more forced selling and accelerating the path toward the $69,000 target. Liquidity remains the central variable in this unfolding test.