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Bitcoin Drops 7% to Nine-Week Low Amid US-Iran Strikes

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Bitcoin Drops 7% to Nine-Week Low Amid US-Iran Strikes

Bitcoin prices have dropped 7% on the day, breaking key support to a nine-week low after the US and Iran launched fresh strikes as talks over a possible ceasefire have stalled. 

Bitcoin (BTC) fell to $65,385 on Coinbase in early trading on Wednesday, its lowest level since late March, according to TradingView.

The slump follows the largest daily fall since Feb. 5 as BTC shed more than $4,500 on Tuesday. 

According to CoinGlass data, around 277,000 traders have been liquidated over the past 24 hours, with total liquidations of around $1.83 billion. More than 90% of them were long positions, primarily in Bitcoin and Ether (ETH).

Bitcoin has fallen below $66,000 in the most significant single-day drop since February. Source: TradingView

Andri Fauzan Adziima, the research lead at Bitrue Research Institute, told Cointelegraph that Bitcoin’s current drop is more about “leveraged liquidations, heavy ETF outflows, and technical breakdowns than pure Iran news, but it amplifies the fear.” 

Adziima said he expected “choppy consolidation,” as real support sits lower around $64,000 to $65,000, “with any de-escalation or strong macro rebound potentially sparking a sharp relief rally.”

The $150 billion crypto market capitalization exodus came as the US continued its military strikes against what it called “aggressive Iranian behavior.” 

US Central Command stated on Tuesday that it had successfully defeated multiple Iranian ballistic missiles and drones, and “conducted self-defense strikes” on Qeshm Island in response to attempted attacks by Iran across the Middle East.

“Iran launched several ballistic missiles toward regional neighbors; however, all failed to hit their intended targets,” CENTCOM said. Two Iranian missiles were fired at Kuwait, and three missiles were launched at Bahrain, it added. 

Related: Crypto turns ‘contrarian bet’ as AI stocks draw investor attention: Bitwise

The latest skirmish comes amid a two-month ceasefire between the US and Iran, which has included indirect talks on extending the ceasefire and lifting a blockade of the Strait of Hormuz. However, negotiations have yet to yield an agreement. 

President Donald Trump claimed on Truth Social on Tuesday that “reports that the Islamic Republic of Iran, and the USA, stopped speaking a few days ago are false and erroneous.” 

“The conversations between us have been going on continuously, including four days ago, three days ago, two days ago, one day ago, and today,” he said. 

The comments came after Iran’s Tasnim news agency reported on Tuesday that the country would halt all conversations with the US until Israel ceased attacking Lebanon.

Magazine: Big Questions: Do we really only need 2–5 cryptocurrencies?

Prediction market traders bet bitcoin’s selloff has further to run

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Prediction market traders bet bitcoin’s selloff has further to run

Prediction market traders are increasingly wagering that bitcoin’s correction is far from over, even after the cryptocurrency tumbled toward $65,000 this week amid mounting pressure from ETF outflows and weakening institutional demand.

On Kalshi, traders currently assign a 66% probability that bitcoin drops below $55,000 this year and a 50% probability of sub-$50,000 prices. They also give a 31% chance that prices could even dip below $40,000.

(Kalshi)

Polymarket traders are expressing a similar view. Contracts on the platform imply a roughly 67% chance bitcoin falls below $55,000 this year and a better-than-even chance it drops under $50,000.

On prediction platform Polymarket, traders now give bitcoin only a 30% chance of outperforming gold in 2026. Gold is down approximately 1.5% in the last month but is up 33% in the last year while BTC is down around 37%.

This comes amid dwindling institutional appetite for the leading cryptocurrency. According to data from SoSo Value, traders withdrew $2.4 billion from U.S.-listed BTC ETFs in May and $1 billion in the first two trading days of June, with the record-breaking outflow continuing.

Meanwhile, K33 Research argues that bitcoin is also losing a battle for investor attention against artificial intelligence-related stocks. As CoinDesk previously reported, in a report on Tuesday, the firm said many investors view the opportunity cost of holding bitcoin as too high while AI-linked companies continue to post outsized gains and major equity indexes push to record highs.

“Much of the market views the opportunity cost of holding BTC as too high while anything AI-related soars,” K33’s Vetle Lunde wrote.

While K33 still views bitcoin as undervalued relative to equities over the long term, prediction markets suggest traders are increasingly positioning for lower prices before any recovery arrives.

While traders increasingly bet on lower bitcoin prices, capital does not appear to be leaving crypto entirely. Instead, it is increasingly moving into digital dollars.

USDT and USDC have both gained market share during bitcoin’s slide to $66,000, CoinDesk previously reported, a sign that traders are raising cash and waiting for better opportunities rather than immediately buying the dip.

Big tech is ‘terrified’ of AI agents wiping out ad revenue, says Billions Network CEO

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Big tech is ‘terrified’ of AI agents wiping out ad revenue, says Billions Network CEO

The legacy financial and digital frameworks propping up the current internet architecture face an imminent, existential crisis.

Evin McMullen, co-founder and CEO of Billions Network, told CoinDesk in an interview during the Proof of Talk conference in Paris that tech giants and global telcos are actively scrambling to deal with an impending collapse of their primary revenue engine: display advertising.

As autonomous AI agents replace human-driven semantic search, the traditional system of monetizing user eyeballs breaks down completely, she added.

“They are terrified—existentially threatened,” McMullen said bluntly, describing the internal reaction of media and telecommunications conglomerates approaching her firm. “AI agents don’t have eyes.

They are not swayed by the visual decoration on the edges of the main body of information that they seek. The interest is less in finding new surfaces to place display ads on, and more of an existential question of how discovery happens. Are we inverting the internet?”

During Consensus in Miami 2026, Cardano Founder Charles Hoskinson mirrored similar thoughts to express how Big Tech feel about AI agents.

“Amazon, Google, Facebook, they’re terrified of the agentic revolution,” Hoskinson said, adding that they are investing heavily because “all of their business models are going to be disrupted.”

With the rise of AI agents, software can scrape a webpage, summarize content and keep the source user inside a chatbot or automated workflow instead of sending a person back to the original site.

Also at Consensus Miami, Cloudflare Chief Strategy Officer Stephanie Cohen said that shift is breaking the internet’s old business model, with non-human traffic now exceeding human engagement.

The core challenge facing the modern web isn’t the technical sophistication of machine intelligence, but a complete absence of programmatic accountability. McMullen pointed out that more than 51% of current online and onchain interactions are driven by unidentified, unaccountable automated bots.

Scaling On-Chain Infrastructure to Legacy Systems

Billions Network has quietly grown to support the third-largest on-chain agent population on the internet, trailing only Binance and Base. According to McMullen, the network’s open-source cryptographic libraries are already utilized by more than 9,000 corporate and sovereign developers worldwide.

In the corporate sector, Billions Network’s technology infrastructure is utilized by platforms like TikTok, the financial giant HSBC, and the decentralized tracking protocol DeBank. It also collaborates with India’s Ministry of Labor to secure credential access for national social security programs, alongside a deployment with the Indian Railway system that protects the digital identities of over 1.2 million personnel.

Franklin Templeton says Wall Street fears blockchain because it threatens its profits

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Franklin Templeton says Wall Street fears blockchain because it threatens its profits

The future of asset management is shifting on-chain, but the transition is exposing a major structural conflict over traditional corporate revenue.

Speaking on a panel at the Proof of Talk summit in Paris, Jenny Johnson, CEO of Franklin Templeton, a $1.74 trillion asset manager, openly addressed the industry hesitation to deploy decentralized networks. According to Johnson, major financial firms are dragging their feet because public blockchain architecture directly challenges their existing profitability.

“This technology threatens a huge number of business models that exist today in traditional finance,” Johnson stated bluntly. “If you see any kind of hesitation, it’s because there is a threat to the business model. Think about the toll-takers in a transaction.”

She explained that if a blockchain can handle settlement instantly via a smart contract, large banks can no longer collect transaction fees as third-party intermediaries.

While crypto-native networks favor open architecture, traditional financial systems are beginning to migrate to public networks due to the significant transaction efficiencies. To demonstrate the cost savings, Johnson cited Franklin Templeton’s history running its tokenized money market fund, Benji, on public networks.

“It was so dramatically cheaper,” Johnson explained, breaking down the internal data. “It cost us about $1.30 a transaction for 50,000 transactions on the old system. And it cost us about $1.13 to run on the Stellar blockchain.”

Johnson’s mention of Benji comes just hours after the Wall Street giant announced it is expanding its digital asset strategy through a new partnership with MoonPay that will allow institutional investors to move between stablecoins and the asset manager’s tokenized money market fund through an onchain workflow.

“In everyday life, anybody—individual, medium, or large enterprise—we want to have a trusted party,” Johnson noted. “We don’t want to keep our assets in our private wallets, in our safes at home. We want to delegate this peace of mind to a third party. And that’s why custodians or banks still have a future.”

The shift of institutional wealth into digital assets will depend entirely on building standard, low-cost compliance rails for legacy investment funds. While Blockstream CEO Adam Back pointed out that bitcoin allows users to maintain true fiscal privacy without an institutional partner, Johnson concluded that standard investors will continue to demand a heavily regulated custody layer.

Bitcoin Price Crashes To $67,000 Range, Down 13% In A Week

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Bitcoin Price Crashes To $67,000 Range, Down 13% In A Week

Bitcoin price has fallen below $68,000 on Tuesday, its lowest level since early April, battered by a multitude of forces. Some of them include Strategy’s first Bitcoin sale in three and a half years, a record ETF outflow streak, and fresh on-chain movement from the long-dormant Mt. Gox estate.

The catalyst that some think rattled markets was a disclosure from Strategy filed with the SEC on Monday. The company sold 32 Bitcoin between May 26 and May 31, fetching an average bitcoin price of $77,135 per coin for total proceeds of roughly $2.5 million. 

The sale is intended to fund distributions on STRC, Strategy’s perpetual preferred stock carrying an 11.5% annual variable dividend.

The numbers are small in isolation — 32 BTC represents just 0.004% of Strategy’s total holdings of 843,706 Bitcoin, purchased at an average bitcoin price of $75,699 per coin. But the symbolic weight hit hard. 

It is the company’s first reported net reduction in Bitcoin holdings through a standalone SEC filing, and the market responded: MSTR stock fell 5.85% on Monday and is falling around 6% so far Tuesday morning. 

Strategy’s sale did not arrive in isolation. U.S. spot Bitcoin ETFs recorded roughly $3.45 billion in withdrawals across 11 straight trading sessions through late May — the largest monthly ETF exodus of 2026. A single session saw $484 million in redemptions.

Bloomberg Intelligence analyst Eric Balchunas pushed back on the panic, noting to CoinDesk that $3 billion in outflows from a $100 billion asset base is “totally meaningless” relative to normal ETF flow patterns. 

He pointed out that cumulative net flows since spot Bitcoin ETFs launched remain near $57 billion, down from a peak of $63 billion — an unusually resilient figure for a volatile asset. ETF share counts have continued to grow even as Bitcoin’s price declined, which Balchunas described as a sign of ongoing adoption rather than investor flight.

Mt. Gox moves $739 Million

Adding pressure to an already fragile bitcoin price, Mt. Gox moved roughly $739 million worth of Bitcoin from its cold wallets on Tuesday — its first on-chain movement in over two months, according to Arkham Intelligence. 

The defunct Japanese exchange, which collapsed in 2014 after a hack that wiped out roughly 850,000 BTC, has been repaying creditors in phases since 2024. The repayment deadline for remaining creditors now stands at October 31, 2026.

Any large wallet movement tied to Mt. Gox triggers anxiety in crypto markets, as creditors who receive repaid Bitcoin have historically sold their holdings. 

The estate still holds thousands of BTC, and each transfer renews questions about how much supply could enter the market before the final deadline.

Bitcoin price teeters on Iran news

A renewed flare-up in the U.S.-Iran conflict has added a risk-off tone across markets. Iran suspended nuclear negotiations with the U.S. in response to Israel’s escalating military operations in Lebanon, raising the risk of broader regional conflict and potential retaliation by Tehran. 

Despite the pause, Donald Trump claimed talks are still progressing “at a rapid pace” while also brokering a tentative ceasefire understanding between Israel and Hezbollah.

At the time of writing, the bitcoin price is in the mid $67,000s. Strategy (MSTR) and Strive (ASST) are both trading nearly 10% lower today as Bitcoin price fluctuations expose the leverage in their “Bitcoin treasury” business models.

The selloff reflects investors reassessing how much premium they are willing to pay over the underlying Bitcoin exposure, especially as spot Bitcoin ETFs and direct crypto products offer cheaper, cleaner ways to access the asset. Because both firms have tied their equity stories so tightly to Bitcoin accumulation, any sharp move in the crypto market is now getting amplified in their share prices on the downside as well as the upside.

Franklin Templeton Wires BENJI Money-Market Fund Into MoonPay Trade for Onchain Stablecoin Swaps

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Franklin Templeton Wires BENJI Money-Market Fund Into MoonPay Trade for Onchain Stablecoin Swaps

The $1.74 trillion asset manager is letting institutions move directly between stablecoins and shares of its tokenized US government money fund through MoonPay’s new institutional rails, marking one of the first listings of a US-registered tokenized MMF on a third-party onchain trading venue.

Franklin Templeton plugged its BENJI tokenized money-market fund into MoonPay Trade on Tuesday, opening an onchain path for institutional users to swap supported stablecoins directly into shares of the asset manager’s US government money fund and back without leaving the blockchain.

The integration, disclosed in a joint statement over Business Wire on Tuesday, links Franklin Templeton’s Benji Technology Platform, the firm’s proprietary blockchain recordkeeping and transfer-agency stack, with MoonPay Trade’s institutional quote, routing, and execution engine.

Franklin Templeton, which reported about $1.74 trillion in assets under management in its latest quarterly report, said BENJI holders will be able to swap into stablecoin liquidity through MoonPay and use the fund inside onchain workflows like treasury management, portfolio rebalancing, and collateral.

The deal turns MoonPay, until recently best known as a fiat-to-crypto onramp, into one of the first institutional trading venues to list a US-registered tokenized money-market fund alongside crypto, fiat, and stablecoins. It also extends BENJI’s distribution beyond Franklin Templeton’s own Benji Investments app and Benji Institutional portal, and lands in a tokenized-treasuries category that CoinGecko now tracks at $11.2 billion in market value, part of a $64.9 billion real-world-assets segment.

Kaul on the “Universal Liquidity Layer”

“Tokenized money market funds only become more useful when they can move with the speed and programmability of the broader digital asset ecosystem,” Sandy Kaul, Franklin Templeton’s head of innovation and digital assets, said in the announcement.

“Teaming up with MoonPay creates another trusted gateway for institutions to move between stablecoin liquidity and tokenized fund exposure.”

Caroline D. Pham, the chief executive of MoonPay Institutional and former acting chair of the Commodity Futures Trading Commission, framed it from MoonPay’s side: tokenized money market funds deliver “improved liquidity and capital efficiency, but only if institutions have access to the onchain financial ecosystem.”

BENJI’s Place in the Tokenized-Treasury Stack

BENJI represents one share of the Franklin OnChain US Government Money Fund, known as FOBXX, which launched in 2021 as the first US-registered mutual fund to use a public blockchain as its system of record. The token now lives across multiple public blockchains, with Total Asset Value at $821 million, according to RWA.xyz.

The product still trails BlackRock’s BUIDL, at $2.4 billion in circulating supply, and Ondo’s USDY at $2.1 billion, according to RWA.xyz. But BENJI is the only entry in that top tier issued by a US-registered mutual fund, a structural distinction that has kept it off most third-party trading surfaces.

MoonPay Trade as Institutional Pipe

MoonPay launched MoonPay Trade in late May as a single-API platform for institutions to execute trades, move liquidity, and settle payments across more than 200 blockchains and protocols. The trading engine pulls together three recent MoonPay acquisitions: Decent for cross-chain routing and liquidity, DFlow for trading technology, and Sodot for crypto key management. MoonPay Trade sits underneath MoonPay Institutional, the regulated trading arm Pham was hired to run.

Franklin Templeton has been widening BENJI’s surface area for more than a year. The firm has partnered with Binance to allow BENJI as off-exchange collateral, has worked with Payward, the parent of Kraken, on tokenizing additional traditional investment products, and in April agreed to buy 250 Digital, a CoinFund spinoff, to grow its crypto-investment business. It is also working with Ondo Finance to tokenize a group of ETFs.

What Stays Off the Pipe

Access is gated to “eligible institutional users” — the same KYC and accreditation gating that applies to BENJI itself, layered on top of MoonPay Institutional’s compliance flow. Retail holders of BENJI in the US still buy and redeem through the Benji Investments app, not through MoonPay. Neither party disclosed the fee structure for stablecoin-to-BENJI conversions through MoonPay Trade or whether settlement runs through any specific network’s BENJI deployment.

Franklin Templeton said the integration is “expected to serve as the foundation for a broader strategic relationship” with MoonPay.

Bitcoin’s ‘fear gauge’ surges nearly 20%, its biggest jump since Feb. 5 crash

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Bitcoin’s ‘fear gauge’ surges nearly 20%, its biggest jump since Feb. 5 crash

Bitcoin BTC$67,222.41 traders are finally taking the price selloff seriously. The cryptocurrency’s fear gauge, the BVIV index, shows it.

BVIV, which measures the 30-day implied or expected volatility in the cryptocurrency, surged nearly 20% on Tuesday to 46.45%. That’s the biggest single-day spike since Feb. 5, according to data source TradingView.

Here’s why it matters.

For roughly two months, the bitcoin market sentiment was calm. Even when BTC dropped from its early May high of $82,000 to $75,000 last week, the market sentiment barely flinched. The BVIV actually remained around its year-to-date low of 40% during that move.

In other words, it was orderly selling. No panic. But that changed Tuesday as BTC’s spot price fell over 6% to $66,000.

The BVIV index exploded with that price drop. The index is essentially a fear gauge. When it rises, traders are aggressively buying options to protect against further downside. Tuesday’s nearly 20% surge signals that protection buying is back.

To put Tuesday’s move in context: back on Feb. 5th, BVIV surged over 50% in a single day, hitting above 90% as bitcoin crashed toward $60,000. Tuesday’s jump is nowhere near that level. But the direction of the move is what traders should care about right now.

BVIV’s daily swings in percentage. (TradingView)

VIX like behavior

Think of BVIV like bitcoin’s version of Wall Street’s VIX fear gauge. Since U.S. bitcoin ETFs launched over two years ago, institutional players have flooded into the market. That institutionalization has created something interesting: BVIV now moves in the opposite direction of bitcoin’s spot price with increasing consistency. Price drops, fear spikes. Price rises, fear fades.

That’s a relatively new dynamic for crypto, but not so much on Wall Street where the S&P 500 and its fear gauge, the VIX, have been inversely correlated for decades.

The takeaway is that after two months of unusual calm, fear is creeping back into the bitcoin market. Whether Tuesday’s spike is a one-day blip or the start of a sustained volatility regime remains to be seen.

Bullish crypto bets lose $1.6 billion as ETH, SOL, DOGE drop 9%

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Bullish crypto bets lose $1.6 billion as ETH, SOL, DOGE drop 9%

Crypto traders hoping the market would catch up to the global stock rally were left nursing tears on Wednesday as a sharp price drop triggered the largest liquidation event since early February.

Roughly $1.84 billion in crypto leveraged positions were liquidated across the past 24 hours as bitcoin BTC$66,877.88 plunged below $66,000 and ether (ETH) broke under $1,900, the largest single-day wipeout since February 5 and a near-pure flush of long bets, with longs taking $1.66 billion of the total and shorts only $180 million, per CoinGlass data.

A liquidation is when an exchange automatically closes a leveraged trade because the trader’s losses have exceeded the collateral they posted to open it. Long positions bet that the price will rise, while short positions are bets on prices falling.

Bitcoin longs absorbed $883.66 million of the damage, ether longs another $475.73 million and solana (SOL) longs $91.18 million, with the remaining roughly $390 million spread across HYPE, DOGE, SUI, BNB, NEAR, AAVE, LINK and the broader top-30 long book.

The single largest order was a $59.67 million BTC-USDT long unwinding on HTX.

Binance accounted for $748 million of the total liquidations, or roughly 41% of the cascade, with 89% of those positions long. Hyperliquid handled $314 million, of which 94% were longs, and Bybit logged $247 million with 93% longs.

Meanwhile, Bitcoin open interest, the total value of all unsettled leveraged futures contracts, actually rose during the cascade.

The contract count climbed from roughly 759,000 BTC to 788,600 BTC even as the long book was being wiped out, per CoinGlass data. Rising open interest into a falling price can indicate new short positions are opening rather than long positions closing, signaling that fresh bearish bets are building on top of the long flush rather than the cascade finding a clearing level.

The positioning split is uneven across trader types. Retail bitcoin traders on Binance, OKX and Bybit are still leaning long at ratios of 2.22, 2.01 and 1.58 respectively, refusing to capitulate even after the wipeout, while whale accounts on OKX have flipped to a 0.54 long-short ratio that CoinGlass flags as ‘extremely bearish.’

Aggregate taker volume across the period showed $65.39 billion in sells against $60.16 billion in buys, with sellers as the marginal actors.

OI rising into a falling price, retail still leaning long, and whale accounts flipping short on OKX all point to a market that has not found a clearing level. A break below $65,000 brings $60,000 into play; a hold opens the door to a relief bounce, but the positioning data argues against the bounce being the more likely outcome.

Bitcoin Fair Value Closer To $224K Based On Debt Risk Model: Bitwise

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Bitcoin Fair Value Closer To $224K Based On Debt Risk Model: Bitwise

New reporting from Bitwise suggests that Bitcoin’s (BTC) undervaluation could expand if investors’ concerns over sovereign debt deepen. The asset management firm said that mounting pressure in global bond markets and rising government debt levels could strengthen Bitcoin’s role as a hedge against macroeconomic risks, with one valuation model suggesting a theoretical fair value of $224,000. 

Debt market turmoil may support Bitcoin in the long-term 

Bitwise pointed to mounting pressure across the global bond markets. The Organization for Economic Co-operation and Development (OECD) estimates governments and companies will need to borrow roughly $29 trillion in 2026, up 17% from 2024 and nearly double the amount raised a decade ago. Around 78% of OECD government borrowing is expected to be used solely to refinance existing debt.

10-year sovereign swap spreads across nations. Source: Bitwise

Bitwise noted that Japan remains a key focus. The country’s 10-year government bond yield recently climbed to 2.78%, while its 30-year bond yield reached a record high. At the same time, Japan’s public debt stands near 230% of GDP, among the highest levels in the current macroeconomic environment.

The report noted that Japanese investors hold approximately $1.2 trillion in US Treasurys, but higher domestic yields are making overseas bonds less attractive. Currently, the 10-year Japanese bond yield is 2.66% on Tuesday, compared to 2.19% for Yen-hedged 10-year US Treasurys, potentially encouraging capital to return to domestic markets.

Bond market stress is not limited to Japan. US 30-year Treasury yields recently reached 5.11% on May 11, its highest level since 2007, while sovereign risk premiums, measured through 10-year swap spreads, have risen to their highest levels since the European debt crisis of 2011-2012.

While these trends could weigh on risk assets in the short term, Bitwise believes a deeper bond-market disruption could eventually become a bullish catalyst for Bitcoin if central banks are forced to inject liquidity to stabilize financial markets.

Bitcoin probability of default vs model value. Source: Bitwise

The firm cited a model developed by investor Greg Foss that values Bitcoin at roughly $224,000 if it gains broader adoption as a hedge against sovereign default risk. Bitwise stressed that the figure is a theoretical estimate rather than a price target.

Despite the long-term bullish case, the report noted that Bitcoin may remain range-bound in the near term as higher real yields and tighter financial conditions continue to pressure demand.

Related: Bitcoin back in ‘distribution phase’ as extreme fear grips crypto market

Declining real yields may improve Bitcoin’s macro backdrop

Bitwise noted that Bitcoin’s near-term outlook may depend heavily on real interest rates, which measure the Federal Reserve’s policy rate after adjusting for inflation. In the report, real rates are calculated as the Fed Funds rate minus US CPI inflation. Historically, Bitcoin has tended to perform well when real rates fall, as cash and bonds become less attractive in inflation-adjusted terms. 

Bitcoin vs year-on-year change in US real rates. Source: Bitwise

The firm noted that Bitcoin’s 2021 bull market coincided with declining real rates, while the 2022 bear market unfolded alongside rising real rates and aggressive monetary tightening. Although real rates remain restrictive, Bitwise said that a scenario in which inflation rises while the Fed keeps rates unchanged could push real rates lower, potentially creating a more supportive backdrop for Bitcoin. 

Meanwhile, Bitcoin researcher Sminston outlined that BTC could trade between $90,000 and $255,000 by the end of 2026, based on the Bitcoin Decay Channel, a logarithmic price model that has historically identified major cycle tops and bottoms. The analyst noted Bitcoin’s recent rebound emerged near the model’s long-term support zone, keeping the broader bullish outlook intact. 

Related: Bitcoin volatility is down 56% but analysts still expect up to 20% BTC price move

Bitcoin ETF Outflows And AI Stock Pivot Trigger Bear Run

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Bitcoin ETF Outflows And AI Stock Pivot Trigger Bear Run

Key takeaways:

  • Bitcoin’s sharp 8% drop triggered $1.5 billion in forced liquidations, ending a tight two-month small-cap correlation.
  • Worsening market sentiment was driven by $2.1 billion in Bitcoin ETF outflows and rising fears of a Federal Reserve interest rate hike.

Bitcoin (BTC) faced a sharp 9% drop over 48 hours, hitting the $67,000 support for the first time in two months. This correction wiped out a substantial $176 billion from the total crypto market cap in just two days, triggering $1.5 billion in forced liquidations for overleveraged long positions. 

Traders remain uncertain about the drivers behind crypto’s underperformance, especially since US equities have shown notable strength.

US Russell 2000 small cap equities index (left) vs. Bitcoin/USD. Source: TradingView

The tight correlation between Bitcoin and US small-cap stocks officially broke on May 21 after a solid two-month run. Worsening market sentiment was likely fueled by $2.1 billion in net outflows from US-listed spot Bitcoin ETFs between May 12 and May 20, though derivatives data had already been hinting at a lack of institutional appetite.

Bitcoin 2-month futures basis rate. Source: Laevitas

The annualized BTC futures premium relative to spot markets has held below the neutral 4% threshold for over three months, confirming weak demand for bullish leverage. 

Strategy’s Bitcoin accumulation pause and strength in AI investments

Strategy (MSTR US), led by Michael Saylor, also sparked mixed reactions after it chose to buy back convertible debt while pausing its signature weekly Bitcoin purchases.

Source: X/bjunjo

X user ‘bjunjo’ said that Strategy entered “survival mode for their debt holders and shareholders,” putting aside the sole mission to accumulate more Bitcoin. According to the analysis, the company will do whatever it takes to meet its financial obligations, as shown by a recent BTC 32 sale. Jeff Dorman, Chief Investment Officer at Arca, called the move “a complete balance sheet mismanagement.”

Source: X/ScroogeCap

Meanwhile, X analyst ScroogeCap noted that Google’s (GOOG US) decision to raise equity rather than debt suggests that private equity is effectively dead as liquidity dries up. The analysis highlights that the Oracle (ORCL US) debt-to-equity ratio remains unusually high, while Meta (META US) might be forced to tap more capital due to “irrational spending.” 

Jim Bianco of Bianco Research reportedly said, “We have not seen the market this concentrated around a single theme in 150 years.” Additionally, JPMorgan research found that 41 AI-related stocks account for half of the S&P 500’s market value.

Related: Bitcoin gets new $50K target after BTC price crashes 6% in a day

Interest rate target probabilities for the Sept. FOMC meeting. Source: CME Group

Traders became increasingly risk-averse as the war in Iran showed no sign of imminent relief, explaining the broader sell-off across cryptocurrency markets. US government bonds are now pricing in a 23% probability of the US Federal Reserve hiking interest rates by September, up from 0% just one month prior according to the CME FedWatch Tool.

Ultimately, the cryptocurrency market crash on Tuesday reflects heavy outflows from spot Bitcoin ETFs, an extreme capital concentration in AI investments and a macroeconomic environment signaling stricter monetary policy for longer than the market had previously anticipated.

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