Bitcoin crash reason explained : For many investors, the sharp decline in Bitcoin over the past week raised one big question: what actually caused the selloff?
While some market experts pointed to Strategy's decision to sell 32 Bitcoin, analysts at Citigroup believe a much larger force has been driving the downturn. According to the bank, continued outflows from spot Bitcoin ETFs remain the biggest factor weighing on the market, as per a report.
Bitcoin (BTC USD) Falls More Than $15,000 in a Week
Bitcoin has dropped from $82,400 to $65,856 over the past week, erasing more than $15,000 in value.
The decline triggered heavy liquidations across the crypto market. More than $2.41 billion in crypto positions were wiped out within 48 hours, including $93 million in futures positions liquidated in a single hour, as per a Coinpedia report. Roughly 95% of those liquidations came from long positions that were caught on the wrong side of the move.
Citigroup Says ETF Outflows Matter More Than Strategy's Bitcoin (BTC USD) Sale
The debate intensified after Strategy disclosed that it sold 32 BTC for approximately $2.5 million between May 26 and May 31.
The sale marked only the second Bitcoin sale in the company's history and sparked discussion because Strategy had long been viewed as a company committed to accumulating Bitcoin rather than selling it.
However, Citigroup analysts argued that investors may be placing too much emphasis on the transaction.
According to the bank, the sale does not significantly change Bitcoin's broader fundamentals. Instead, analysts believe spot Bitcoin ETF flows remain the strongest indicator of investor demand and one of the biggest drivers of Bitcoin's price movements, as per a Coingape report.
Spot Bitcoin ETFs Continue to See Heavy Withdrawals
Citigroup estimates that spot Bitcoin ETFs account for roughly 45% of Bitcoin's weekly return fluctuations.
Recent ETF data highlights the pressure facing the market. Between May 15 and June 2, spot Bitcoin ETFs in the United States recorded approximately $3.77 billion in net outflows.
Some of the largest withdrawal days included, as per the Coingape report:
- May 27: $733.4 million in outflows
- June 2: $519.1 million in outflows
- June 1: $483.8 million in outflows
- May 18: $448.6 million in outflows
- May 26: $333.6 million in outflows
Three Major Events Shaped Market Sentiment
Beyond ETF withdrawals, three developments have dominated market discussions.
The first involved BlackRock's IBIT ETF, which recorded nine consecutive sessions of outflows during May. The fund saw approximately $2.43 billion leave over the month.
Attention intensified after a reported $1.26 billion dark-pool block sale on May 26, a transaction large enough to attract significant interest from traders and analysts.
The second event was Strategy's Bitcoin sale. While the amount sold represented only a tiny fraction of the company's 843,706 BTC holdings, the move attracted attention because investors had become accustomed to viewing Strategy as a consistent Bitcoin buyer.
The third development came from Mt. Gox. On June 2, the defunct exchange transferred 10,422 BTC, valued at roughly $739 million, to new wallets.
With creditor repayments scheduled before the October 2026 deadline, large wallet movements continue to fuel speculation about potential future selling activity.
Regulatory Developments Could Become the Next Catalyst
Citigroup believes positive regulatory developments could help improve market sentiment.
Analysts specifically pointed to the CLARITY Act, which has recently entered the Senate's legislative calendar.
While Citi believes the probability of the legislation passing this year has declined, the bank still estimates roughly a 50% chance of eventual approval and views it as a potential catalyst that could renew investor interest in digital assets, as per the Coingape report.
Altcoins Show Unusual Strength During Bitcoin's Decline
Despite Bitcoin's sharp drop, several major altcoins have not experienced the type of selloff often seen during major crypto corrections.
- Ethereum fell around 5% but remained above $1,824.
- Solana declined 5.14%, while BNB lost 5.62%.
- Meanwhile, Hyperliquid gained nearly 20% over the previous seven days.
Analysts Watch Key Bitcoin Support Levels
Analyst Michaël van de Poppe noted that Bitcoin is now sitting less than 10% above its 200-week moving average and near a major monthly support zone, as per the Coinpedia report.
He also highlighted that Bitcoin's daily Relative Strength Index (RSI) has fallen below 25, a level that has historically coincided with short-term market bottoms.
According to van de Poppe, if Bitcoin stabilizes around current levels, altcoins could potentially outperform, creating conditions that some traders are already describing as a possible "altcoin summer," as per the Coinpedia report.
FAQs
Why does Citigroup think Bitcoin is falling?Citigroup believes continued spot Bitcoin ETF outflows are the primary driver behind Bitcoin's recent decline.
How much money has left spot Bitcoin ETFs recently?
About $3.77 billion flowed out of U.S. spot Bitcoin ETFs between May 15 and June 2.
