Bitcoin fell below $70,000, bottoming out during the day at $69,055, with positions liquidated worth $775 on the day, accumulating $2 billion in the week.
Bitcoin (BTC) continues its downward trend, dropping below $70,000 to $69,055 on the day and exceeding $2 billion in liquidations for the week. The decline forced systematic closures of leveraged positions, triggering margin calls and liquidations by exchanges that fueled further selling.
When liquidations could not be fully closed on the market, Auto-Deleveraging (ADL) rules reduced the positions of profiting counterparties to cover the shortfalls, acting as an accelerator. As a result, a rapid readjustment of open interest occurred, along with a steeper downward revaluation of long exposures than anticipated.
How far can the price of Bitcoin fall?
One of the main drivers of the Bitcoin price decline is that institutional demand has shifted substantially in recent months. US Bitcoin spot ETFs, which bought 46,000 Bitcoin last year, turned into sellers at the start of this year, registering outflows of $7 billion in November, $2 billion in December, and $3 billion in January.
Markets priced in tighter liquidity after Kevin Warsh’s nomination as Fed chair raised expectations of an aggressive stance and accelerated balance sheet reduction. Bitcoin was trading roughly 40% below its October peak of $126,000, reflecting both the mechanical unwinding of leverage and a weakening of the previous “only upside” demand narrative.
This episode underscores that cryptocurrency prices remain sensitive to risk sentiment across assets and exchange-level risk management norms. Product and compliance teams will need to closely monitor ETF flow data and open interest on exchanges, and incorporate ADL and automatic deleveraging behavior into stress scenarios for custody and margin policies.
For investors, the near-term outlook will depend on whether liquidity providers absorb the continued outflows or whether further deleveraging forces deeper repricing.
