Bitcoin ETF outflows and shrinking liquidity intensified the recent BTC price decline.
Margin liquidations accelerated the selloff as key support levels broke.
Correlation with tech stocks added pressure amid broader risk-off sentiment.
Bitcoin price has come under intense pressure in recent weeks, with the market enduring a deep pullback fueled by weakening demand, heavy ETF outflows, and a wave of forced liquidations.
The downturn has erased months of gains and pushed traders to question whether the latest slide marks a temporary setback or the start of a deeper cycle reset.
ETF outflows add fuel to the decline
Bitcoin’s slide has been sharp and persistent since its early October peak above $126,000.
Since the October peak, the cryptocurrency has shed almost $800 billion in value, sinking to levels last seen in the spring.
ETFs, once a stabilising force for Bitcoin (BTC), are now driving additional weakness.
BlackRock’s IBIT ETF, which previously absorbed sell-offs, has posted its largest monthly redemption on record, with $520 million leaving the fund.
This reversal marks a shift in institutional sentiment and has become a major source of downward pressure.
A recent NYDIG research highlights how ETF outflows, shrinking stablecoin supplies, and changing corporate treasury strategies are eroding the demand engine that supported Bitcoin earlier this year.
Greg Cipolaro of NYDIG describes the current cycle as a “negative feedback loop,” in which factors that once boosted the market are now accelerating the downturn.
This shift has placed Bitcoin under sustained selling pressure at a time when broader risk appetite is also weakening.
A key part of this shift can be seen in the stablecoin market, where supplies have declined for the first time in months, with some tokens losing significant value after liquidation events.
In addition, digital asset treasuries, once active Bitcoin buyers, are pulling back as they reduce liabilities through asset sales or share buybacks.
These moves have contributed to a steady drain of liquidity across the crypto sector.
Bitcoin price outlook
From a technical standpoint, Bitcoin has plunged into oversold territory and printed a hammer candle, hinting at a potential swing low.
Eyes are now on $88,500, which capped rallies earlier in the year and briefly halted last week’s selloff.
A sustained break above it could create conditions for a short-term recovery, with targets near $94,000 and $95,000.
However, that setup faces stiff resistance from broader market sentiment.
Bitcoin’s tight relationship with risk assets adds another layer of complexity.
The correlation between Bitcoin and Nasdaq 100 futures has climbed to unusually high levels, reaching near 0.96.
When tech stocks fall, Bitcoin tends to follow, and recent turbulence tied to concerns over an AI bubble has weighed heavily on both markets.
Bitcoin dominance has also slipped to multi-month lows, signalling that capital is drifting away from BTC and into either safer assets or high-risk alternatives.
The market is also seeing increased volatility from margin liquidations.
Leveraged positions, especially in perpetual futures, have magnified the recent moves.
As Bitcoin fell below $87,000, more than $900 million in positions were wiped out, with longs taking most of the damage.
Notably, liquidation cascades have become a recurring theme, deepening each leg lower.
Furthermore, oscillating indicators, including the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD), remain bearish, hinting that previous bounces have been sold into quickly.
Bitcoin price analysis | Source: TradingView
A drop below recent lows could open the door to a retest of the $76,000 region, where Bitcoin (BTC) stabilised during an earlier market shock linked to tariff fears.
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