Bitcoin extended its losses on Thursday, dropping below the $66,000 level as the market reacted to a combination of fund outflows and fresh concerns over crypto platform liquidity. The digital asset traded as low as $65,734 after moving in a range between $68,318 and $65,612 during the session, while Ether saw a modest 0.2% decline to $1,908.76.
ETF Flows Turn Negative
Data from Farside Investors revealed that U.S. spot bitcoin exchange-traded funds recorded net outflows of approximately $276.3 million on Wednesday. Major funds like BlackRock's IBIT and Fidelity's FBTC contributed to the redemptions, shedding $73.4 million and $92.6 million respectively. These funds have become a critical gauge of institutional demand, and sudden outflows can exert significant downward pressure on prices, especially in thin market conditions.
Liquidity Scare Rattles Sentiment
Adding to the negative sentiment, crypto liquidity provider BlockFills confirmed it had frozen client deposits and withdrawals last week, though spot and derivatives trading remain active as the firm works to stabilize its position. The news, first reported by the Financial Times, reminded traders of past liquidity crises in the sector and contributed to the day's risk-off move.
Analysts noted that the market lacks a clear catalyst for a sustained rebound. "A clear catalyst for a sustained rebound remains elusive," stated IG Australia analyst Tony Sycamore. Kaiko's Laurens Fraussen highlighted that thin order books could lead to outsized price swings even from relatively small selling pressure.
Macro Headwinds and Forecasts
The broader macroeconomic environment offered little support. Recent U.S. jobs data prompted traders to scale back expectations for near-term interest rate cuts, a headwind for yield-less assets like bitcoin. Analysts at Standard Chartered warned of further potential declines, with Geoff Kendrick forecasting a possible drop toward $50,000 in the coming months, citing "challenging" market conditions.
All eyes are now on Friday's release of the U.S. Consumer Price Index for January, which could either ease or exacerbate rate concerns. Traders will also monitor the next batch of ETF flow figures and any updates from BlockFills regarding the resumption of withdrawals.
