Institutions liquidating + forced liquidation stampede, is Bitcoin's next stop in the 50,000s?

Bitcoin rebounded from its low on Friday after once approaching the critical support level of $60,000. Market analysts warn that institutional investors are selling large portions of their cryptocurrency holdings, and Bitcoin may further drop into the $40,000 to $50,000 range. The U.S. Bitcoin ETF market is undergoing a sharp reversal. According to CryptoQuant data, U.S. ETFs that bought 46,000 Bitcoins last year have become net sellers in 2026. Markus Thielen, Head of Research at 10X Research, said: “Institutional investors are truly liquidating their crypto holdings.” He pointed out that the average cost for investors who bought Bitcoin via ETFs is $90,000, and these investors "are now in substantial losses." High-Leverage Positions Forced to Liquidate, Institutional “Capitulation Selling” Thielen added: “These large outflows are happening during U.S. trading hours, as investors are admitting defeat and exiting the market.” According to a previous article by WallstreetCN, the world’s largest spot Bitcoin ETF, BlackRock’s IBIT, plunged 13% to around $36 on Thursday, hitting a new low since October 2024, with year-to-date losses expanding to 27%. The options market shows panic, with the premium for put options over calls exceeding 25 volatility points, a record high. Market analysis suggests this round of “capitulation selling” may have been triggered by forced liquidation of highly leveraged IBIT positions held by one or several non-crypto hedge funds. These funds may have tried to reverse the trend via leveraged options trading, but sustained losses eventually wiped out their positions as Bitcoin fell. The forced liquidation mechanism continues to pressure the crypto market. When Bitcoin reaches preset prices, traders’ positions are automatically sold. According to Coinglass data, more than $2 billion in long and short crypto positions were liquidated on Thursday, with Friday's liquidation nearing $800 million. The Bitcoin sell-off coincided with continued declines in U.S. tech stocks. Bitcoin normally correlates with risk assets such as tech stocks, often following their downward movement. Additionally, assets like gold and silver have seen sharp recent volatility, intensifying market turmoil. Analyst Warning: The $60,000 Mark May Not Hold Bitcoin fell below $61,000 late Thursday, hovering just above the $60,000 mark. As of Friday’s report, Bitcoin had slightly recovered to $66,000. Currently, Bitcoin is down more than 40% from the record high above $126,000 set last October. Other cryptocurrencies have performed even worse: Ether and XRP are down more than 60% from their highs, while Solana has fallen over 70%. Some market analysts predict Bitcoin could further drop into the $40,000 to $50,000 range, representing another 25%-40% decline from current levels. 10X Research forecasts that Bitcoin may drop to $50,000 after a brief rebound. Thielen said: “I think we’ll see a minor counter-trend rally, maybe sideways or a slight rebound. But I believe we’ll hit another low during the summer.” Risk Warning and Disclaimer The market carries risk, and investment must be cautious. This article does not constitute personal investment advice and does not take into account the investment objectives, financial situation, or needs of any individual user. Users should consider whether any opinions, views, or conclusions presented here fit their particular situation. Investing accordingly is at your own risk.