Bitcoin is back in the spotlight after falling below $67,000, hitting its lowest level since early April.
At the time of writing, Bitcoin is at $66,825, up 0.23% since it opened early Wednesday in Asian trading.
This sudden drop not only shook investor confidence, but also triggered a wave of huge losses in the crypto market with liquidations reaching about $1.25 billion in 24 hours.
Bitcoin reportedly fell more than 6% to $66,614 during trading.
The decline also dragged most other crypto assets into the red, signaling weakening market sentiment after several weeks of failing to maintain upward momentum.
What worries investors is that this fall comes as the US stock market continues to set new records.
The S&P 500 index, for example, continues to rise, but Bitcoin has failed to attract the same capital flows.
This raises questions about whether the world's largest digital asset can still compete as a leading investment option in the current market environment.
Selling pressure is intensifying as many leveraged traders are forced to close their positions.
When prices fall rapidly, exchanges automatically liquidate positions that no longer have sufficient margin.
The knock-on effect of this liquidation is causing more selling pressure, accelerating the price decline.
Market sentiment was also affected after Strategy, formerly known as MicroStrategy, confirmed that it had sold some of its Bitcoin holdings.
Although the move was expected, many investors still saw it as a negative development given that the company has been known for its long-term stance on Bitcoin.
At the same time, institutional interest in Bitcoin has been seen weakening as Bitcoin investment products have recorded an outflow of 62,794 BTC in the past three weeks.
The Bitcoin spot ETF in the United States also recorded 11 consecutive days of net outflows, reflecting investors' cautious attitude towards the crypto market.
At the same time, some capital is seen shifting to the rapidly growing artificial intelligence (AI) sector, increasing Bitcoin's competition to attract institutional investment.
From a technical perspective, analysts warn that Bitcoin is still at risk of falling lower if it fails to hold support levels around $66,000.
Market sentiment also remains cautious due to ETF outflows, weakening institutional participation and investor interest shifting to the AI sector.
For now, the focus is on Bitcoin's ability to maintain current levels to avoid greater selling pressure.
