Bitcoin fell below $71,000 amid geopolitical tensions and significant leveraged position liquidations. Despite $276 million in bullish liquidations, institutional traders on major exchanges increased their long positions. However, persistent outflows from spot Bitcoin ETFs and a slight discount on the USDT stablecoin indicate underlying selling pressure, casting doubt on the sustainability of the derivatives-driven bullish sentiment.
Bitcoin dropped below $71,000 for the first time in seven weeks, liquidating $276 million in leveraged bullish positions. Traders reduced exposure following renewed military action between the US and Iran.
Despite this risk aversion, whales and market makers increased their bullish bets in derivatives markets. At Binance, the long-to-short ratio for top traders surged to 1.4x from 1.1x a week prior.
Aggregate open interest for Bitcoin futures remained flat at $43.5 billion. Traders did not rush to close positions at a loss despite the forced liquidations.
The annualized funding rate for Bitcoin perpetual futures jumped above its neutral range for the first time in over six months. This hints at growing confidence but also heightens the risk of cascading liquidations.
The weakness in Bitcoin’s price occurred as Brent crude oil jumped to $95 per barrel. Investors’ intense focus on the AI sector also contributed to capital outflows from cryptocurrency markets.
Anthropic, the developer of Claude AI, confidentially filed its IPO prospectus. Separately, Elon Musk’s SpaceX officially filed its own IPO prospectus.
Tether’s USDT stablecoin traded at a slight 0.10% discount, signaling capital outflows into traditional fiat currency. This aligns with $3.46 billion in net outflows from US-listed spot Bitcoin ETFs since May 13.
Heavy selling pressure in spot markets is likely the driver behind Bitcoin’s recent price correction. With no clear evidence that cryptocurrency market outflows are slowing, traders may remain skeptical of a sustainable short-term bull run.
