Bitcoin Price Drop Triggers Spot BTC ETF Outflows and Market Liquidations

Highlights:

• Bitcoin dropped to $82,455 yesterday, its lowest since November last year.
• Eleven U.S. spot Bitcoin ETFs saw continued outflows, extending their streak to seven days.
• Market sentiment deteriorated as liquidations reached $768 million, signaling extreme investor fear.

Bitcoin (BTC) dropped to $82,455 on Feb. 26, its lowest since November, as panic selling hit the market. As of now, Bitcoin is trading around $86,131, showing a 3.10% decline in the last 24 hours. Bitcoin remains under pressure from macroeconomic factors like ongoing tariff wars.

On Feb. 25, the crypto market dropped sharply, with Bitcoin falling below $86,500. The drop came after Trump confirmed on Feb. 24 that his 25% tariffs on Canada and Mexico would proceed as planned. Earlier this month, he had agreed to delay them for 30 days. Tariffs could raise inflation and slow growth, putting pressure on the Fed. The Fed plans to cut rates when inflation nears 2%, but inflation is moving away from that target.

Rising inflation and delayed rate cuts could strengthen the U.S. dollar, pushing Bitcoin down. Rate cuts typically help crypto as they make traditional assets less attractive. On Feb. 26, the Crypto Fear & Greed Index fell to 21, signaling “Extreme Fear.” Today, it dropped further to 10.

Record BTC ETF Outflows Follow Price Drop

After the price drop, 11 U.S. spot Bitcoin ETFs saw record outflows of $1.136 billion on Feb. 25. This pushed BTC below $83,500, leading to another $757 million in ETF outflows on Wednesday.

BlackRock’s iShares Bitcoin Trust saw a record $420 million in withdrawals in a single day as Bitcoin hit yearly lows. On Feb. 26, BlackRock’s spot Bitcoin ETF (IBIT) lost 5,000 BTC, its largest outflow yet, surpassing the $332 million withdrawn on Jan. 2. Fidelity’s Wise Origin Bitcoin Fund (FBTC) extended its seven-day outflow streak, with $145.7 million exiting on Feb. 26. Other BTC ETFs, including Bitwise, Ark 21Shares, Invesco, Franklin, WisdomTree, and Grayscale, recorded outflows between $10 million and $60 million.

2/26 Bitcoin ETF Total Net Flow: -$757.03 million
(2nd largest daily outflow of Bitcoin Spot ETFs, trailing only yesterday, which recorded the highest outflow.)$IBIT (BlackRock): -$420.56 million$FBTC (Fidelity): -$145.69 million$BITB (Bitwise): -$13.65 million$ARKB (Ark… https://t.co/h96gbRLW8N pic.twitter.com/YX1G9rFmq8

— Trader T (@thepfund) February 27, 2025

Market Liquidations Surge as Bitcoin Faces Declining Sentiment

The market drop led to massive liquidations, wiping out over 188,857 leveraged traders in 24 hours. Total liquidations hit $772 million, with Bitcoin losing $467 million and Ether $123 million, according to Coinglass. 

Earlier optimism about pro-crypto policies under the new U.S. administration has faded as weak macroeconomic data weighs on sentiment. Bitcoin’s falling volatility and declining prices indicate that speculators are losing confidence in short-term gains.

Experts like BitMEX co-founder Arthur Hayes and 10x Research’s Markus Thielen say most Bitcoin ETF investors are hedge funds seeking quick profits, not long-term holders. As profits shrink, they are exiting. On Feb. 24, Hayes predicted Bitcoin could drop to $70,000 due to BTC ETF outflows.

Chief Analyst at Bitget Research, Ryan Lee, noted:

“The $3–5 billion in leveraged liquidations suggests market corrections may eliminate overleveraged positions, potentially creating a rebound opportunity if trade tensions de-escalate. For now, crypto remains tightly correlated with macroeconomic uncertainty, balancing bearish trade risks against structural bullish drivers like institutional adoption.”