Bitcoin's Price Collapse: ETF Outflows and Liquidations Target $70K and $58K

The core narrative is one of a liquidity vacuum collapsing price. Over the past two weeks, $2.8 billion in net redemptions flowed out of U.S. spot Bitcoin ETFs, marking their second- and third-largest weekly outflows on record. This massive withdrawal of institutional capital directly pressured the market, driving Bitcoin below the average cost basis of ETF-held coins. That benchmark sits at approximately $87,830 per coin, leaving the typical ETF buyer underwater for the first time in months.

The breakdown accelerated sharply on low-liquidity weekend trading. Bitcoin fell about 11% over the weekend, sliding from near $84,000 to a nine-month low around $74,600. This volatility, amplified by thin weekend volumes, triggered a violent cascade of liquidations. In a single day, more than $2 billion in long liquidations swept across futures markets, a direct consequence of the price plunge and leveraged positions.

The result is a self-reinforcing cycle of selling. The ETF outflows created the initial pressure, pushing price below key cost bases. The weekend breakdown then ignited a liquidity crunch, where the lack of buyers forced rapid liquidation of leveraged longs. This process further fueled the price collapse, testing the $70,000 level and leaving institutional holders exposed.

Testing the $70K Target: Institutional and Technical Support

The immediate technical battleground is defined by broken cost bases and a massive supply of underwater coins. Bitcoin has fallen below the average ETF cost basis of $84k, a key psychological and technical level. The next major support is the April 2025 low near $74,420, a level that has already been tested and breached. This breakdown from institutional cost bases removes a floor of passive support, leaving the market vulnerable to further downside.

On-chain metrics confirm the severity of the selloff. Over 46% of Bitcoin supply is now underwater, a threshold last seen during prior bear market phases. This widespread unrealized loss creates a latent selling pressure, as holders may eventually capitulate to cut losses. The distribution of supply shows a significant gap in onchain ownership between $82k and $70k, which could act as a magnet for price, drawing it lower to test demand in that range.

Critical short-term support is identified by the Short-Term Holder Cost Basis model. This model points to a key level at $83,400. A break below this level risks a deeper correction toward $80,700. The combination of ETF outflows, a massive underwater supply, and a clear path to the $70k gap suggests the current sell-off is not a minor correction but a test of fundamental support.

The Path to $58K: Historical Precedent and On-Chain Stress

The setup for a deeper correction is now defined by on-chain metrics that historically precede extended bearish phases. The current supply distribution reveals 22% of all Bitcoin held at unrealized losses, a threshold last observed during Q1 2022 and Q2 2018. Both periods preceded extended bearish phases as long-term holders faced mounting pressure to realize losses. This widespread underwater supply creates a latent overhang, as the market lacks the on-chain liquidity to absorb a fresh wave of selling.

A critical signal for recovery is the Realized Profit/Loss Ratio. Its 90-day moving average is currently below 5, a level historically required for mid-cycle recoveries. Previous bull market phases in 2024 required this metric to rise and hold above that threshold before price expansion occurred. The market is stuck in a liquidity trap, where insufficient on-chain profit-taking prevents the formation of a sustainable base for a rally.

Options positioning adds a layer of vulnerability. While near-term put premium was bought, longer-dated protection was net sold. This suggests traders are underestimating the potential for a prolonged downturn, leaving the market exposed if the sell-off accelerates. The combination of a bearish supply distribution, a broken recovery signal, and defensive options positioning points to a path of least resistance toward the next major support level.