ETF Outflows, OI Crash, and Fear

• Bitcoin price has dropped below $71k amid heightened selling pressure.
• Bhutan moved $22M BTC to QCP as Bitcoin open interest fell $40B from its peak.
• Bitcoin led liquidations with $409M wiped out as long squeeze boosts bearish momentum.

Bitcoin (BTC) price has dropped more than 20% in the past seven days to trade at about $70,488 on Thursday, February 5. For the first time since November 2024, the Bitcoin price has slipped below $71k, amid extreme fear of further capitulation.

Following Bitcoin’s 7.7% drop in the past 24 hours, CoinMarketCap’s Fear and Greed Index plunged to 11, which represents extreme fear among crypto traders.

Why Is Bitcoin Price Capitulating?

Low institutional demand amid OI capitulation

Bitcoin’s price has faced intense bearish sentiment in recent months, driven by low liquidity inflows. According to market data analysis from SoSoValue, the U.S. spot Bitcoin exchange-traded funds (ETFs) have recorded a total outflow of around $3 billion during the past three weeks.

Onchain data analysis from Arkham shows that the government of Bhutan has deposited more than $22 million worth of Bitcoin to QCP Capital in the past week. Meanwhile, Bitcoin’s Open Interest has dropped by more than $40 billion since its October peak to hover about $49.5 billion at press time. 

Bearish Breakout

Since hitting its all-time high in October 2025, the Bitcoin price has been trapped in a falling trend. The flagship coin has formed lower lows and broken below its crucial buy zone around $80k to retest its 2021 peak. 

From a technical analysis standpoint, Bitcoin price may be following its 2022 bear market trend, thus signaling further weakness. Earlier this week, Stifel Financial Corp. (NYSE: SF) predicted that the Bitcoin price may drop to $38k due to tighter Fed policy, slowing U.S. crypto regulation, shrinking liquidity, and heavy ETF outflows.

Heavy Liquidation of Long Traders

Recently, Bitcoin’s price has been under the influence of a long squeeze. Heavy liquidation by long traders has fueled short traders, suggesting a bearish outlook for the midterm.

CoinGlass data shows that $842 million in positions were liquidated over the past 24 hours, with long traders accounting for $711 million. Bitcoin alone contributed about $409 million in liquidations, $357 million of which came from long positions.

What’s Next?

According to several prominent asset managers, led by Cathie Wood and Matt Hougan, the Bitcoin price is closer to the bottom of its multi-week capitulation. With Gold having shown signs of a blowoff top, following its recent parabolic rally, expected capital rotation to Bitcoin and the wider crypto market will catalyze its market rebound towards a new all-time high.

Related: Here’s the BTC Price for 2026, According to ChatGPT, Claude, Perplexity, and Grok