Bitcoin price continued its strong crash today, June 4, reaching its lowest level since March this year, continuing a downward trend that started mid May. BTC plunged to $61,325, erasing billions of dollars in value. This crash is happening as Wall Street investors continue dumping the coins.
A closer look at third-party data shows that Wall Street investors are actively selling their Bitcoin holdings. In just three days alone, these investors have dumped ETFs worth over $1.4 billion.
The investors sold ETFs worth over $2.4 billion last month, ending a two-month buying spree. Most of this selling is coming from BlackRock’s IBIT ETF, which has lost billions of dollars in the past few months.
There are two main reasons why the ongoing BTC ETF outflows are rising. First, it is happening because of the coin’s underperformance. BTC price has crashed by over 30% this year, while the stock market is at its record high. As such, investors are largely capitulating and selling these assets and moving to the equities market.
Second, the ongoing BTC ETF outflows is happening because of the ongoing artificial intelligence boom that mirrors the dot-com bubble of the early 2000s. This boom has already minted a few companies into the $1 trillion club. In addition to the Magnificent 7 names, other companies like Micron, TSMC, SK Hynix, and Samsung have joined it.
Third-party data suggests that stocks ETFs are booming this year. For example, the DRAM ETF has already become a $15 billion fund, while the Vanguard S&P 500 Index fund has crossed the $1 trillion mark this week.
This performance also explains why other popular assets are no longer seeing strong ETF demand this year. For example, gold ETFs like GLD and IAU have seen substantial outflows this year as investors have rotated towards the stock market.
Bitcoin price has also crashed because of the ongoing geopolitical tensions between the US and Iran. Talks between the two countries have broken down, and Iran has launched several missiles towards key US allies.
These tensions may continue now that there are risks that Iran will accelerate its nuclear goals under Mojtaba Khamenei. An IEA report this week showed that risks for Iran having a weapon have jumped before the war started. Also, some popular analysts – Larry Johnson and Pepe Escobar – warned that Iran had acquired a nuclear weapon recently.
These tensions mean that inflation will remain at an elevated level in the coming months. Such a move will force the Federal Reserve to maintain higher inflation for longer than expected. Bitcoin’s role as an inflation hedge has been questioned.
BTC price chart | Source: TradingView
Technical analysis suggests that the BTC price has more downside to go in the coming months. It has already crashed below the 50-day and 100-day Exponential Moving Averages (EMA).
The coin also formed a rising wedge pattern, which normally leads to more downside over time. Also, the Relative Strength Index (RSI) and other oscillators have continued falling in the past few months.
Therefore, the coin will likely continue falling in the foreseeable future. If this happens, the next key level to watch will be at $60,000, followed by $50,000.