Bitcoin bounces off 2026 lows as ETF outflows weigh on price
In brief
- Bitcoin fell 9% in three days to $59,500, triggering $1 billion in leveraged liquidations
- Spot Bitcoin ETFs saw $469 million net outflows Wednesday as traders rotate to rate-sensitive stocks
- Friday's $13 billion options expiry heavily favors puts; 78% of calls priced at $72,000+
- Rate hike odds jumped to 80% by December from 68%, reducing demand for non-yielding assets
ETF Outflows and Rate Expectations
Spot Bitcoin ETFs experienced $469 million in net outflows on Wednesday, marking a sharp reversal from the institutional inflows that buoyed the asset earlier this year. The selloff coincides with a sharp repricing of rate expectations. Traders now see an 80% chance of US interest rate hikes by December, up from 68% a month ago, according to the CME FedWatch Tool. Higher rates erode the appeal of non-yielding assets like Bitcoin.
The inflation backdrop shifted in May. The US Personal Consumption Expenditures index showed a 4.1% increase from the prior year, keeping rate-hike pressure alive. Meanwhile, 5-year US Treasuries yielded 4.15%, offering yields that compete with Bitcoin's zero coupon.
Options Expiry and MicroStrategy's Burden
A $13 billion Bitcoin options expiry on Friday looms over the market. 78% of call options are priced at $72,000 or above, while put options open interest on Deribit exceeds call options by $3.4 billion. The skew favors sellers, not buyers.
MicroStrategy's position has become a liability. The corporate Bitcoin holder has bought $64.1 billion worth of Bitcoin since 2020, and its unrealized losses have widened as the price retreated. Each new low compounds the psychological pressure on the firm and on traders holding similar positions.
Divergence From Tech Strength
Tech stocks showed resilience this week. Micron Technology jumped 16% after solid quarterly earnings, Sandisk gained 18%, and Applied Materials rose 10% on new chipmaking tools. The US government also took a 9.9% stake in Intel and proposed $2 billion for quantum computing firms. Yet Elon Musk's SpaceX shares fell 32% from their peak, signaling uneven sentiment.
Bitcoin's decoupling from this strength reflects structural pressure. The asset faces a three-part headwind: institutional outflows, a bearish options setup, and rising real yields. Until one of those shifts, the $59,500 recovery may prove fleeting.
