Bitcoin Under Pressure as $3B Long Liquidation and Liquidity Tightening Drive Market Shift to Crypto Stocks, ETFs

Bitcoin is currently exhibiting mixed signals in the crypto market. The leading cryptocurrency is trading below its 7-day moving average, indicating short-term bearish momentum, yet remains above its 30-day moving average, keeping a longer-term bullish outlook. Over the past week, Bitcoin fell 2.5%, largely due to a $3.08 billion long position liquidation amid heightened volatility. This volatility has been amplified by macroeconomic challenges such as global liquidity contraction from central bank tightening, and U.S. trade and labor market uncertainty. Historically, negative liquidity trends have dampened rallies in both crypto and equities. Despite Bitcoin’s declining momentum and the BTCUSD/SPX ratio dropping below the key 18:1 level, institutional demand remains strong. U.S. Bitcoin spot ETFs saw $9 billion in net inflows over five weeks, even as long-term holders increased profit-taking, exerting additional selling pressure. Meanwhile, crypto equities have outperformed Bitcoin, with listed crypto firms’ market capitalization surpassing $300 billion as institutional capital shifts from direct BTC exposure to crypto stocks. Notable companies like Circle are launching IPOs, while Robinhood and Galaxy Digital report robust crypto-related growth. Coinbase is deemed undervalued by 18%, reflecting ongoing interest in crypto equities from both institutional and retail investors. Retail sentiment is also shifting toward crypto stocks, signaling structural changes in investment preferences. For crypto traders, these developments highlight the importance of monitoring global liquidity trends, BTC/SPX ratios, and capital flows into ETFs and crypto equities. While short-term selling pressure persists for Bitcoin, strong momentum in crypto stocks and ETFs points to evolving market dynamics and possible new opportunities.