Wintermute and Bitfinex Analyze Bitcoin’s Recent Drop: Reasons and the Next Potential Price Level Identified!

Bitcoin, which experienced a drop of approximately $18,000 in about 10 days, is the subject of much debate regarding the reasons for its decline.

While some argue that Strategy’s sell-off was the main reason for the decline in Bitcoin, others claim that these sales were not the primary cause of the drop.

At this point, the latest analysis comes from cryptocurrency market maker Wintermute. In its latest report, Wintermute stated that the continuous outflows from US institutional funds are insufficient to generate new buying pressure in the market.

At this point, Wintermute notes that the real problem in the decline wasn’t the sale of 32 $BTC, but rather the outflows from spot Bitcoin ETFs for 10 consecutive days. The report states that a total outflow of approximately $2.97 billion was recorded in May.

It is also noted that while there are purchases in the market, these purchases are not offsetting the selling pressure.

“We believe Strategy’s sale of 32 Bitcoin had a limited impact and that this round of decline was primarily triggered by sales from US institutional investors and the ongoing outflows from ETFs. Capital is currently flowing into US equities.”

We currently don’t see a significant return in fund flows, and therefore we don’t believe the market has bottomed out yet.

Finally, analysts emphasized that Bitcoin did not generate sufficient trading volume in the $50,000 to $59,000 range during its 2024 bull run, highlighting that this region lacked significant technical support.

Therefore, if Bitcoin breaks below $59,000, it easily risks falling to $50,000.

Bitcoin’s Drop Is Institutional!

Bitfinex analysts also analyzed the reasons for the decline in Bitcoin and the current situation. According to Bitfinex, the drop in $BTC stems from fears of ETF outflows and high interest rates.

Bitfinex states in its latest report that the recent decline in $BTC price is the result of a combination of factors, including large-scale outflows from spot ETFs, reduced leverage in the derivatives market, and concerns about prolonged high interest rates.

However, analysts added that this was not a classic capitulation period, as we see in typical bear cycles where investors largely give in and begin selling.

“The current situation is more like a period where institutional and large investors are gradually selling off their cryptocurrencies. The sales are being made slowly and incrementally. Therefore, we cannot clearly see whether the bottom has been reached or not.”

Analysts, noting that investors are viewing the rises not as rallies but as exit opportunities, stated, “Both on-chain and cash flow data indicate a distribution, or selling, regime in the market. As prices rise, investors are selling rather than accumulating. This suggests that the market will remain structurally defensive until spot demand makes a significant and definite return. Because rallies are not bought, they are sold.”

*This is not investment advice.