Bitcoin Nears Pre-Election Floor as ETF Flows Stall, Citi Says

Bitcoin (BTC) fell to around $76,000 on February 4, nearing levels seen before the U.S. presidential election, as stalled ETF flows and macroeconomic concerns continue to weigh on the cryptocurrency market. The world's largest digital asset has lost more than 14% of its value this year, with the S&P 500 and NASDAQ 100 also showing muted performance in recent weeks. Analysts note that the broader risk-averse sentiment across global markets has led to increased selling pressure and volatility.

ETF flows have become a focal point for investors tracking the health of the crypto market. Spot Bitcoin ETFs saw a fresh outflow of $272 million, pushing total assets below $100 billion for the first time since April 2025. This development coincided with a broader decline in Bitcoin, which has fallen below the average cost basis for ETFs at $84,000.

The sell-off has led to significant liquidations in the derivatives market. Over $2.5 billion in Bitcoin positions were liquidated in early February, according to data from CoinGlass, as traders reacted to a mix of macroeconomic concerns and thin liquidity.

Why Did This Happen?

Bitcoin's decline has been influenced by a range of factors, including geopolitical tensions and macroeconomic uncertainty. Reports of an explosion at Iran's Bandar Abbas port and a brief U.S. government shutdown have contributed to a risk-off environment, pushing investors away from crypto assets.

Meanwhile, the U.S. Treasury's liquidity management, including quarterly refunding announcements and continued drain from markets, has added pressure on risk assets. The Federal Reserve's balance sheet remains a key point of concern, with continued shrinkage potentially limiting available liquidity for crypto markets.

What Are Analysts Watching Next?

Citi analysts have highlighted the $70,000 level as a critical inflection point for Bitcoin. This level represents the pre-election floor, with the current administration's stated support for digital assets potentially influencing market dynamics.

Regulatory progress on the U.S. digital asset market structure bill remains uncertain, with mixed political support and delays affecting investor sentiment. The outcome of Senate negotiations will likely play a key role in shaping the regulatory landscape and investor inflows in the near term.

Market observers also note the growing importance of institutional participation in on-chain trading rather than relying solely on securitized ETFs. Thomas Restout, CEO of institutional liquidity provider B2C2, suggested that institutions are increasingly trading the underlying assets directly, signaling a potential shift in market dynamics.

What About the Broader Market?

The broader crypto market has followed Bitcoin's lead, with altcoins also declining sharply. The global market cap for cryptocurrencies has fallen from $3.11 trillion to $2.64 trillion in the past week.

Despite the decline, some altcoin funds have seen modest inflows, including ETFs tracking Ether (ETH), XRP (XRP), and Solana (SOL). However, these inflows remain small compared to the outflows from Bitcoin ETFs.

Bitcoin's dominance of the crypto market has also remained strong, with altcoins largely tracking its performance. Even revenue-generating DeFi and protocol tokens have declined alongside BTC, highlighting the central role of Bitcoin in the crypto ecosystem.

As the market approaches key levels and regulatory developments, investors remain cautious. The combination of macroeconomic uncertainty, geopolitical tensions, and regulatory ambiguity continues to shape market sentiment and investor behavior.