Bitcoin and Crypto Markets Plunge into ‘Capitulation’ as $700 Million Exits ETFs
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The cryptocurrency market is experiencing a sharp downturn, with Bitcoin (BTC) and other major digital assets facing significant selling pressure. Analysts are now characterizing the current market conditions as a “capitulation” phase, signaling a potentially prolonged period of decline rather than a short-term correction.
The broader cryptocurrency market shed 6.4% of its value in a single day, with a staggering 92 of the top 100 cryptocurrencies falling in unison. Bitcoin, the leading cryptocurrency, dropped 7% to $70,884, while Ethereum (ETH) declined by 7.7% to $2,097 as of Friday morning (Korean time). Other notable losses included Ripple (XRP), down 10.6% to $1.43, and Binance Coin (BNB), which fell 9.1% to $691.
Overall market capitalization has contracted to $2.49 trillion, with trading volume surging to $216 billion – the highest level in a week – indicating heightened investor activity and panic selling. Despite the overall downturn, a few altcoins saw gains, with Hyperliquid (HYPE) rising 3.2% and A7A5 increasing by 2%.
According to investment analyst Nick Percrine, co-founder of Coin Bureau, the current slide isn’t a typical market adjustment. “The current situation in which Bitcoin is sliding toward the psychological support level of $70,000 is not a short-term adjustment, but a transition from the distribution phase to the reset phase,” he explained, adding that this phase is expected to last “months, not weeks.”
Bitcoin is currently testing support at $68,400, with a potential further drop to $65,500 if that level fails. A rebound would need to break through $72,000 to gain momentum, with $83,598 acting as the primary resistance level. Ethereum faces similar challenges, with key support levels at $1,990, $1,930, and $1,850 should the $2,000 mark fall.
Institutional Selling and ETF Outflows Fuel the Decline
The primary drivers behind the market downturn appear to be substantial selling from large investors and significant outflows from U.S. spot Bitcoin exchange-traded funds (ETFs). Bloomberg reports that ETF holders are continuing to sell even at a loss, suggesting a “structural selling” pattern as Bitcoin integrates further into traditional financial systems.
Data from trading platform SoSoValue reveals that six out of twelve U.S. spot Bitcoin ETFs experienced outflows, totaling $544.94 million. BlackRock and Fidelity accounted for the bulk of these outflows, with $373.44 million and $86.44 million exiting their respective ETFs. The Ethereum ETF also saw a negative flow of $79.48 million on the same day.
Bhutanese Government’s BTC Transfer Adds to Market Anxiety
Adding to the instability, the government of Bhutan has moved approximately $22 million worth of Bitcoin out of its government wallets over the past week. Analytics platform Arkham interpreted this move as a potential signal of an impending sale, further unsettling the market. Arkham noted that Bhutan periodically sells Bitcoin holdings, with a significant sale occurring in mid-to-late September 2025.
Regulatory Developments and Investor Sentiment
The cryptocurrency industry is also navigating potential regulatory shifts, with discussions underway regarding a stablecoin compromise in cooperation with community banks related to the U.S. Clarity Act. Percrine believes that collaboration with institutions is crucial for the industry’s expansion, highlighting the agility and political influence of community banks.
Investor sentiment has plummeted, as reflected in the ‘Fear and Greed Index,’ which currently stands at 11 – its lowest level in two months and firmly in the “extreme fear” territory. Experts anticipate that macroeconomic and geopolitical factors could exacerbate the market’s decline, suggesting a defensive approach is warranted.
In this volatile environment, TokenPost Academy emphasizes the importance of data analysis and structural interpretation. “Why did the ETF fund outflow occur?”, “What is the signal of whale and institutional selling?”, “When did the fear and greed indices, which are psychological indicators, become a buying opportunity?” are key questions investors should be asking, according to the academy.
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The ability to identify opportunities during short-term declines, the academy argues, is what separates successful investors from the rest.
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Please note: This article was summarized using a language model based on TokenPost.ai. Key content may be excluded or differ from the facts.
