Bitcoin News Today: Crypto's $1T Exodus: Panic or Contrarian Bet?

The cryptocurrency market is grappling with a $1 trillion shock as a wave of panic and fear grips investors, reminiscent of the darkest days following the 2022 FTX collapse. Over the past 24 hours, more than $1.1 billion in leveraged positions were liquidated, with $968 million attributed to long positions. This has forced over 246,000 traders out of the market, reigniting comparisons to the FTX crisis. The largest single liquidation- a $44.29 million BTC-USDT position on HTX -highlighted the severity of the downturn. Exchanges like Hyperliquid and Bybit saw $134 million and $122.57 million in long liquidations, respectively according to data.

The sell-off has been exacerbated by a sharp decline in institutional and retail demand. U.S.-listed Bitcoin spot ETFs recorded $870 million in outflows on Thursday, the second-largest single-day withdrawal since their launch. Grayscale's GBTC led the exodus with $318 million in outflows, followed by BlackRock's IBIT at $257 million. Ethereum ETFs also faced $259.7 million in outflows, their largest since October. The cumulative outflows underscore a waning appetite for crypto among institutional investors and a lack of retail confidence according to analysts.

Bitcoin's price has dropped below $100,000, trading at $96,847 as of Friday, while Ethereum and XRP hover near multi-month lows. The market's technical indicators paint a grim picture: Bitcoin's Relative Strength Index (RSI) has entered oversold territory not seen since 2022. Analysts warn that the drop below the lower volatility band signals severe stress, with many traders caught off guard by the abrupt reversal.

Bitcoin, BTC Price

The liquidation frenzy has intensified fears of a new bear market. Over the past month, Bitcoin has lost 24% of its value, with long-term holders accelerating distributions. Retail participation remains subdued, particularly in the derivatives market, where XRP's futures open interest has declined from $4.17 billion to $3.78 billion since mid-November according to market data. Meanwhile, the broader crypto market's total capitalization has shrunk by 5.4% to $3.36 trillion.

Amid the turmoil, ARK Invest has taken a contrarian stance, resuming crypto-related investments by purchasing shares in BitMine and Bullish. BitMine, now a major Ethereum treasury holder, has drawn parallels to Michael Saylor's Bitcoin-focused strategy. Saylor himself has denied dumping Bitcoin despite a $1.3 billion liquidation event, asserting that his firm remains a significant BTC holder.

Regulatory and macroeconomic factors continue to weigh on sentiment. The U.S. Treasury's recent actions, including the expansion of BlackRock's BUIDL Fund to Binance and BNB Chain, have added to uncertainty. Meanwhile, a trade group has urged regulators to block Sony's foray into crypto banking, citing systemic risks.

The market's next move will hinge on whether this correction stabilizes or escalates into a full-blown bear phase. Analysts at 10X Research argue that the current environment- marked by weak ETF inflows and sustained selling by long-term holders -points to a deepening bear cycle. For now, the crypto sector remains in a state of flux, with investors bracing for further volatility.