- Spot Bitcoin ETFs saw massive outflows of $469 million in a single day, signaling fading institutional demand.
- A put-heavy $13 billion Bitcoin options expiry this week creates strong downward pressure on prices.
- Capital is rotating from crypto toward surging tech stocks and higher-yielding US Treasuries.
- MicroStrategy faces significant unrealized losses on its substantial Bitcoin holdings, weighing on market sentiment.
Bitcoin plunged to a nine-month low this week, shedding 9% in three days and triggering over $1 billion in liquidations as institutional interest evaporated. The drop to near $58,000 coincided with a sharp $469 million net outflow from US-listed spot Bitcoin ETFs on Wednesday, a key proxy for institutional demand.
Consequently, the crypto market is struggling to compete with a resurgent tech sector. Stocks like Micron Technology and Sandisk surged 16% and 18% respectively on strong earnings, while 5-year US Treasuries now offer a 4.15% yield. Meanwhile, investors grew more confident inflation had peaked despite a 4.1% increase in the May Personal Consumption Expenditures index, as Crude Brent oil prices retreated sharply.
However, Bitcoin faces unique internal headwinds beyond the macro shift. The upcoming $13 billion Bitcoin options expiry heavily favors put options, with $3.4 billion more put than call open interest on Deribit. Furthermore, MicroStrategy now sits on a huge unrealized loss after accumulating $64.1 billion worth of Bitcoin since 2020.
Consequently, traders now see an 80% chance of US interest rate hikes by December, according to the CME FedWatch Tool, up from 68% a month ago. This makes non-yielding assets like Bitcoin less attractive. Bitcoin’s momentum now depends on catalysts beyond equity tailwinds to spark a meaningful recovery.
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