Bitcoin Plunges to Three-Month Low Amid ETF Outflows and Global Market Jitters

Bitcoin, the world's largest cryptocurrency, has plummeted to a three-month low, falling below $88,000. This significant drop marks its lowest level since mid-November. The sell-off is not a random occurrence, as U.S. Bitcoin ETFs have witnessed six consecutive days of outflows, with a staggering $516 million withdrawn on February 24 alone, according to Farside Investors. Over the past two weeks, ETF outflows have totaled $1.14 billion, the highest two-week withdrawal period since spot Bitcoin ETFs were launched.

Bitcoin's decline is not solely attributed to ETF outflows. Global market conditions have turned risk-averse, with Nasdaq futures dipping 0.3% and the Japanese yen strengthening. Investors are bracing for a possible Bank of Japan rate hike, which has historically triggered Bitcoin crashes. In July 2024, a surging yen led to a $15,000 drop in Bitcoin's price.

The crypto market's decline has resulted in over $1.3 billion in liquidations over the past 24 hours, with Bitcoin alone accounting for $523 million. This mass unwinding has affected over 362,000 traders, amplifying the sell-off.

Despite the panic, some analysts view this correction as a normal occurrence. Raoul Pal, CEO of Global Macro Investor, pointed out that Bitcoin experienced five corrections of 28% during its 2017 bull run, each lasting two to three months. Whether this is merely a bump in the road or the start of a more significant trend remains to be seen.