Bitcoin News Today: Bitcoin plunges 6.3% as leveraged ETFs and capital rotation drive 48-hour sell-off

Bitcoin experienced a sharp correction of $7,000 within a 48-hour period at the end of July 2025, driven by a combination of technical corrections, large-scale liquidations, and significant exchange-traded fund (ETF) flows across the cryptocurrency markets. The sudden drop saw Bitcoin break below the $115,000 support level, triggering over $200 million in leveraged position liquidations and signaling a broad shift in market sentiment. Analysts, including Matthew Sigel of VanEck, attributed the decline primarily to capital reallocation rather than fundamental weaknesses in the Bitcoin protocol [1].

The market shift had a cascading effect, with Ethereum, XRP, and Solana also experiencing losses as investors redirected capital from Bitcoin to other assets. Ethereum’s exchange-traded products attracted approximately $2.2 billion in inflows, further amplifying Bitcoin’s waning dominance during this period. The rapid rotation of capital underscores the influence of institutional investors and the sensitivity of the cryptocurrency market to macroeconomic signals and policy developments [1].

The sell-off also highlighted the risks associated with leveraged crypto products. Analysts emphasized that 2x leveraged ETFs are especially vulnerable during sharp declines, as even minor movements in the underlying asset can lead to significant value erosion. This dynamic poses challenges for investors unfamiliar with the mechanics of leveraged instruments, compounding losses during periods of heightened volatility [3].

Macroeconomic uncertainties, including potential trade tensions and fiscal pressures, were identified as contributing factors to the market’s nervousness. Investors increasingly favored safe-haven assets, signaling a broader retreat from risk. These conditions align with historical patterns observed in ETF-driven market movements, suggesting that further volatility could persist if macroeconomic conditions remain unstable [1].

The broader crypto market has entered a phase of cautious evaluation, with the Fear and Greed Index reflecting heightened fear across multiple timeframes. Traders are closely monitoring for signs of a potential rebound, but analysts caution that without a clear reversal in macroeconomic trends, downward pressure on Bitcoin and related assets is likely to continue in the near term [1]. The ongoing uncertainty has prompted many to reassess their positions and hedge against further volatility in the market.