Institutional liquidation + forced liquidation stampede, is Bitcoin's next stop in the 50,000s?
Bitcoin once approached the $60,000 mark, and analysts warn that institutions are accelerating the sale of crypto assets, which may lead to Bitcoin further dipping into the $40,000 to $50,000 range. CryptoQuant data shows that the U.S. ETF that heavily bought 46,000 Bitcoins during the same period last year has turned into a net seller by 2026. The average holding cost for ETF investors is about $90,000, and they are currently facing substantial losses overall
Bitcoin rebounded from a low on Friday, having previously approached the critical support level of $60,000. Market analysts warn that institutional investors are massively selling off their cryptocurrency holdings, and Bitcoin may further dip to the range of $40,000 to $50,000.
The U.S. Bitcoin ETF market is experiencing a dramatic reversal. According to CryptoQuant data, U.S. ETFs that purchased 46,000 Bitcoins during the same period last year have turned into net sellers in 2026.
Markus Thielen, head of research at 10X Research, stated: "Institutional investors are really liquidating their cryptocurrency holdings." He pointed out that investors who bought Bitcoin through ETFs have an average cost of $90,000, and these investors "are now in a substantial loss position."
High-Leverage Positions Liquidated, Institutional "Surrender Selling"
Thielen added, "These large outflows are occurring during U.S. trading hours, and investors are conceding and exiting the market."
According to a previous article from Wall Street Watch, the world's largest Bitcoin spot ETF, BlackRock's IBIT, plummeted 13% to around $36 on Thursday, hitting a new low since October 2024, with a year-to-date decline of 27%. The options market shows a spread of panic, with put options trading at a premium of over 25 volatility points compared to call options, reaching an all-time high.
Market analysts suggest that this round of "surrender selling" may have been triggered by the forced liquidation of high-leverage positions held by one or more non-crypto hedge funds in IBIT. These funds may have attempted to reverse the situation through high-leverage options trading, but continued losses ultimately wiped out their positions as Bitcoin fell.
The forced liquidation mechanism continues to pressure the crypto market. When Bitcoin hits a set price, traders' positions are automatically sold. According to Coinglass data, over $2 billion in cryptocurrency long and short positions were liquidated on Thursday, with the liquidation scale approaching $800 million on Friday.
The Bitcoin sell-off coincides with the continued decline of U.S. tech stocks. Bitcoin typically shows correlation with risk assets like tech stocks, often following their downward trends. Additionally, assets like gold and silver have experienced significant volatility recently, exacerbating market turmoil.
Analyst Warning: The $60,000 Level May Not Hold
Bitcoin fell below $61,000 on Thursday evening, hovering just above the $60,000 mark at one point. As of Friday's press time, Bitcoin has slightly rebounded to $66,000.
Bitcoin is currently down over 40% from its historical high of over $126,000 set last October. Other cryptocurrencies have performed even worse. Ethereum and XRP are down over 60% from their historical highs, while Solana has seen a decline of over 70% Some market analysts predict that Bitcoin may further drop to the range of $40,000 to $50,000, which would be a decline of about 25% to 40% from the current level.
10X Research expects that Bitcoin may fall to $50,000 after a brief rebound. Thielen stated, "I believe we will see a slight counter-trend rebound, possibly consolidating or rebounding slightly. But I think we will hit another low in the summer."
