Bitcoin Falls Below $66,000 as ETF Outflows and US-Iran Strikes Rattle Markets

Bitcoin briefly fell below $66,000 late Tuesday before slightly rebounding, while Ethereum and other major cryptocurrencies also declined, as traders continue to digest Strategy's recent bitcoin sale alongside escalating US-Iran hostilities and a wave of leveraged liquidations. The world's largest cryptocurrency dropped to a low of around $65,700 Tuesday night before rebounding slightly to $66,460 as of 1:00 a.m. ET Wednesday, according to The Block's BTC price page. On Coinbase, BTC fell as low as $65,385 in early Wednesday trading, its weakest level since late March, per TradingView. The slump followed the largest daily fall since Feb. 5, with BTC shedding more than $4,500 on Tuesday. Ethereum slipped 7.1% to $1,849, while BNB lost 7.2% to trade at $635. XRP fell 4.8%, and Solana declined 7.7% to $73.25. Tron shed 3.4% to $0.3297. Hyperliquid's HYPE remained the lone green outlier in the top 10 by market value, holding a 19.9% weekly gain at $71.98 despite a 3.1% decline in the past 24 hours.

U.S. spot bitcoin exchange-traded funds recorded $519.2 million in net outflows on Tuesday, extending their negative flow streak to 12 consecutive days, according to SoSoValue data. Spot Ethereum ETFs also posted $90.2 million in net outflows, marking their 16th straight day of outflows. The cumulative record spot bitcoin ETF outflow streak through Tuesday has crossed $3.2 billion. Around 277,000 traders were liquidated over the past 24 hours, with total liquidations of around $1.83 billion, according to CoinGlass data. More than 90% of them were long positions, primarily in Bitcoin and Ether. The broader sell-off wiped roughly $150 billion from total crypto market capitalization.

Dominick John, an analyst at Zeus Research, told The Block that the crypto decline was mainly driven by heavy institutional ETF outflows, aggressive long liquidations, and broader macro de-risking that reduced liquidity across the crypto market. "Forced unwinds in leveraged positions accelerated downside pressure within the major assets," said John. Andri Fauzan Adziima, research lead at Bitrue Research Institute, told Cointelegraph that Bitcoin's current drop is more about "leveraged liquidations, heavy ETF outflows, and technical breakdowns than pure Iran news, but it amplifies the fear." Adziima said he expected "choppy consolidation," as real support sits lower around $64,000 to $65,000, "with any de-escalation or strong macro rebound potentially sparking a sharp relief rally." The $65,000 level is the immediate technical anchor; a break below brings $60,000 into focus, while a hold opens the door to a relief bounce as overleveraged positioning gets flushed.

Fresh airstrikes in the Middle East pushed oil prices higher and intensified risk-off sentiment. WTI crude futures rose 1.13% to $94.82, while Brent crude climbed 1.04% to $97.07 per barrel. US Central Command stated on Tuesday that it had successfully defeated multiple Iranian ballistic missiles and drones, and "conducted self-defense strikes" on Qeshm Island in response to attempted attacks by Iran across the Middle East. "Iran launched several ballistic missiles toward regional neighbors; however, all failed to hit their intended targets," CENTCOM said. Two Iranian missiles were fired at Kuwait, and three missiles were launched at Bahrain. The latest skirmish comes amid a two-month ceasefire between the US and Iran, which has included indirect talks on extending the ceasefire and lifting a blockade of the Strait of Hormuz. President Donald Trump claimed on Truth Social on Tuesday that "reports that the Islamic Republic of Iran, and the USA, stopped speaking a few days ago are false and erroneous." The comments came after Iran's Tasnim news agency reported that the country would halt all conversations with the US until Israel ceased attacking Lebanon.

Beyond geopolitics, Peter Chung, head of research at Presto Research, said the crypto market continues to digest Strategy's recent bitcoin sale. The Michael Saylor-led firm disclosed Monday that it sold 32 BTC for roughly $2.5 million between May 26 and May 31, marking its first bitcoin sale since December 2022. An analyst known as Bull Theory on X noted the transaction is tiny compared to Strategy's holdings of 843,706 BTC, acquired at a total cost of roughly $63.86 billion, representing about 4% of BTC's total supply. Strategy's Nasdaq-listed shares dropped 9.15% to close at $136.08 on Tuesday, with the stock down about 23% over the past month. "Those searching for a BTC-specific narrative to explain its 24-hour underperformance will inevitably point to MSTR's sale of 32 BTC," said Chung. Whether the relatively small sale — which Saylor described as an "inoculation" — turns out to be a smart defensive move or "the straw that breaks the camel's back" will depend on how the market contextualizes it. Mt. Gox also transferred $739 million to a new wallet on Tuesday, adding to the bearish flow.

Crypto analyst Max Trades noted that while BTC has been unable to establish a convincing recovery, funding rates remain highly positive, indicating that many perpetual futures traders are still positioning for upside, even as spot demand stays absent. Crypto investor Rekt Capital also pointed out that Bitcoin has delivered a technically significant signal by closing the month below its 2024 all-time high level, arguing that unless BTC reclaims that level, the sequence of technical events will increase the chance of revisiting the 2021 all-time highs for a retest.

Global equities moved in the opposite direction. The Philadelphia Semiconductor Index rallied almost 6% to a record on Tuesday, with Tokyo Electron and Taiwan Semiconductor Manufacturing both reaching new peaks, according to Bloomberg. The MSCI All Country World Index set a fresh all-time high on the AI rally that has dominated stocks all year. SpaceX was reported to be seeking $135 a share for a $75 billion initial public offering, while S&P 500 and Nasdaq 100 futures held little changed near record levels. In Asia, Japan's Nikkei 225 rose 2.95% during intraday trading to hit a record high, China's CSI 300 gained 1.13%, and Hong Kong's Hang Seng index fell 1.56%. South Korean markets were closed for a holiday.

Looking ahead, John of Zeus said the downward pressure on crypto markets could persist through June, while Adziima noted the pressure may ease within days to one or two weeks "once headlines cool or de-escalation hints emerge." "Event-driven dips in this cycle have rebounded fast," Adziima added. Chung offered a more cautious take: "[It] is unclear whether this alone explains BTC's underperformance. The decoupling started a couple of weeks earlier, most likely driven by selling pressure to fund rotational buying into AI-themed equities."