Bitcoin Falls 6% in a Day: What Triggered the Sharp Crypto Sell-Off?

Key Takeaways 
 

• Bitcoin fell 6.27% to $66,466 on June 3, hit by ETF outflows, institutional selling, and nearly $1.5 billion worth of liquidations from Monday.
   
• Bitcoin was trading above the mark of $70,000 until recently. Once it breached that level, leveraged positions broke down, and sentiment became negative in the entire cryptocurrency market.

What is Driving Bitcoin Below $66,500? Here’s What’s Going On!

On June 3, 08:38 IST, the price of Bitcoin is trading at $66,466, a drop of 6.27% in one day. There is no issue with the underlying cryptocurrency here. The sell-off is driven by institutional selling, rising ETF outflows, and unfavorable economic sentiments.

It is not only Bitcoin that has faced a downturn. Ethereum dropped 7.40%, Solana 7.91%, Dogecoin 7.97%, and BNB 6.67% in 24 hours, according to CoinDCX’s data. The fear and greed index stands at 26, which is clearly on the fearful side.

Indian Crypto Investors Have Suffered Massive Losses

Losses are now becoming a reality for retail investors in India who purchased Bitcoin in the price range of ₹57–60 lakhs. The price levels are breaking down support levels that were anticipated, which are leading to losses in their portfolio. 
 

The United States consumer price inflation figures will come on June 10, followed by a meeting of the Federal Reserve on June 17. Neither event may help alleviate the prevailing sentiments soon. Leveraged investors sitting in India are now facing the worst of both worlds.

Expert Takeaways: Bitcoin Drop Should Not Worry Investors Much

According to Riya Sehgal, Research Analyst at Delta Exchange, “Bitcoin’s slide below the support of $70,000 and its further drop into the $66,000 region have fueled panic across the leveraged positions, which resulted in liquidations worth nearly $1.5 billion since Monday.”

Also, according to her, the lack of institutional interest cannot be ignored, as May saw the lowest reading in the crypto treasury inflow of $180 million in months.

According to Avinash Shekhar, Co-Founder and CEO of Pi42, “the ongoing price correction should be taken more like a test of conviction rather than a sign of breakdown.” 

As per Vikram Subburaj, CEO of Giottus, “until ETF flows pick up and Bitcoin moves back above $70,000, it is prudent for investors to be more Capital protection-focused”, long-term investors can make gradual acquisition bets.

Conclusion

Bitcoin is at an interesting junction currently, and the $65,000 to $66,000 level is a significant psychological support. Should this level break, then $64,000 is the next level in focus. There needs to be selling pressure to ease up, along with a flow of new money into crypto to assist in its recovery.

FAQs 

Has a large sale-off in Bitcoin resulted in a large liquidation in crypto as well?

Yes, due to the drop below its support lines, having shut down the majority of its leveraged positions, it would be closing nearly $1.5 billion in liquidations. Thus, it will lead to further downward pressure on most of the cryptos.

Can we witness investors shift money into Ethereum and large-cap cryptos as Bitcoin continues to fall?

Investors may shift assets into other altcoins like Ethereum and large caps as well. While some altcoins and large caps might rise with the rise of BTC and vice versa, there is no guarantee they would be exempt from further losses during a large dip.