Bitcoin rebounded from its lows on Friday, after approaching the key $60,000 support level. Market analysts warn that institutional investors are selling off their cryptocurrency holdings on a large scale, and Bitcoin could fall further into the $40,000 to $50,000 range.
The U.S. Bitcoin ETF market is experiencing a sharp reversal. According to CryptoQuant data, U.S. ETFs that bought 46,000 Bitcoins last year turned into net sellers in 2026.
Markus Thielen, Head of Research at 10X Research, stated: "Institutional investors are truly liquidating their cryptocurrency holdings." He noted that investors who bought Bitcoin through ETFs had an average cost of $90,000, and these investors are "now in a state of substantial losses."
High-Leverage Positions Liquidated, Institutional "Capitulation Selling"
Thielen added: "These massive outflows are happening during U.S. trading hours, investors are giving up and exiting."
As mentioned in a previous Wall Street News article, the world's largest spot Bitcoin ETF, BlackRock's IBIT, plunged 13% to around $36 on Thursday, hitting a new low since October 2024, with its year-to-date loss widening to 27%. The options market shows panic spreading, with put options trading at a premium of over 25 volatility points compared to call options, a record high.
Market analysis suggests this round of "capitulation selling" may have been triggered by the forced liquidation of highly leveraged IBIT positions held by one or more non-crypto hedge funds. These funds might have attempted to turn the situation around with high-leverage options trading, but as losses continued to mount, their positions were ultimately wiped out by Bitcoin's decline.
Forced liquidation mechanisms continue to pressure the crypto market. When Bitcoin hits a preset price, traders' positions are automatically sold. According to Coinglass data, over $2 billion in cryptocurrency long and short positions were liquidated on Thursday, with liquidation volumes nearing $800 million on Friday.
The Bitcoin sell-off coincides with the continued decline of U.S. tech stocks. Bitcoin often correlates with risk assets like tech stocks, tending to follow when the latter fall. Additionally, recent sharp volatility in assets like gold and silver has exacerbated market turmoil.
Analysts Warn: The $60K Level Might Not Hold
Bitcoin fell below $61,000 on Thursday evening, briefly hovering just above the $60,000 mark. As of press time on Friday, Bitcoin had slightly recovered to $66,000.
Bitcoin is now down over 40% from its all-time high above $126,000 set last October. Other digital currencies have performed worse. Ether and XRP are down over 60% from their peaks, while Solana has fallen more than 70%.
Some market analysts predict that Bitcoin could fall further into the $40,000 to $50,000 range, which would represent an additional decline of about 25% to 40% from current levels.
10X Research expects Bitcoin could drop to $50,000 after a brief rebound. Thielen stated: "I think we will see a small counter-trend bounce, maybe a sideways consolidation or a slight rebound. But I believe we will make another low during the summer."
