BTC Drops Under $70,000 as Liquidity Weakens and ETF Withdrawals Continue
The price of Bitcoin dropped beneath the $70,000 mark while cryptocurrency market sentiment reached its weakest point in over four months, as experts cite concerns about institutional capital exits, declining liquidity conditions and heightened leverage risks.
On Friday, Bitcoin dropped beneath the $70,000 threshold, continuing its recent downward trajectory as market sentiment among investors worsened in the face of institutional capital withdrawals, constricting liquidity conditions and wider macroeconomic headwinds.
At the time of writing, Bitcoin (BTC) is changing hands at $68,607.23, reflecting a 9.2% decrease over the past week, based on data from CoinGecko.
This price drop occurred alongside a dramatic deterioration in overall market sentiment. On Friday, the Crypto Fear & Greed Index plummeted to 20, marking its lowest measurement in over four months and placing it firmly within "extreme fear" territory. The indicator previously touched this level on July 8.
Vikram Subburaj, who serves as CEO of cryptocurrency exchange Giottus, pointed to institutional capital outflows, deteriorating crypto liquidity and anticipated December Federal Reserve interest rate hike as factors behind Bitcoin's fragility. "Investors should avoid chasing short-term dips or using excessive leverage," he said.
A Friday analysis from 10x Research drew attention to Bitcoin's deviation from US equity markets. During the period spanning Nov. 5 through Nov. 12, Bitcoin posted a 5.9% decline while the Nasdaq 100 recorded a 6.4% increase, indicating the digital currency was reacting more strongly to climbing Treasury yields and an appreciating US dollar than to technology sector equities.
According to the research firm, Bitcoin was showing increasing correlation with gold, which experienced a 5.5% drop during the identical timeframe, coinciding with the US 10-year Treasury yield rising above 5%.
Separately, institutional trading platform Talos issued a warning that shallow liquidity coupled with high leverage levels could magnify market volatility. The platform's weekly analysis revealed that Bitcoin order-book depth throughout major exchanges dropped to $72 million on Nov. 9, approximately 33% beneath typical levels.
Liquidity remains thin while leverage stays elevated, leaving the market vulnerable to sharp moves in either direction. A rebuild in order-book depth and a turn in capital flows would provide a firmer foundation for recovery.
Tanay Ved, senior research associate at Talos
The price decline comes on the heels of persistent outflows from US spot Bitcoin exchange-traded funds (ETFs). BlackRock's iShares Bitcoin Trust (IBIT) experienced over $2 billion in net withdrawals spanning nine consecutive trading sessions ending Wednesday, while the broader fund category lost almost $1.44 billion throughout five sessions.
Early data from Farside Investors indicated an additional $47.7 million in net withdrawals on Thursday, though numbers for BlackRock and Fidelity remained outstanding.