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Bitcoin Bulls Lose Control After Rejection at $78K Erases Overnight Recovery
Bitcoin lost its recent gains after failing to hold above the $78,000 level and falling back to just above $77,000.
Key Takeaways
- On 21 May, Bitcoin fell below the $78,000 mark, surrendering recent gains and closing slightly above $77,000.
- Continued outflows from spot Bitcoin ETFs and a 0.3% decline triggered liquidations worth $44.3 million.
- Analysts warn that if the NASDAQ enters a correction, capital could rapidly leave high-risk crypto assets.
Bitcoin Loses Momentum Amid Growing ETF Outflows
Bitcoin endured another disappointing trading session, failing to maintain the $78,000 level and giving back earlier gains, ending the 24-hour period slightly above $77,000.
Price action reversed the trend seen from Wednesday afternoon through early Thursday morning. Market data showed that during this period the leading cryptocurrency steadily climbed from just above $77,200 to briefly break above the $78,000 threshold shortly before midnight.
Although Bitcoin briefly held that level, the first of two sell-off waves pushed it back below $77,500.
A sharp rebound lasting less than an hour lifted it above $78,000 once again, but this proved to be the final moment it traded at that level. During the morning session, the cryptocurrency gradually declined, reaching just below $76,700 around 9:44 a.m. Eastern Time.
At the time of writing, Bitcoin had partially recovered and was trading near $77,200, down 0.3% compared with the same time 24 hours earlier.
The modest decline left its market capitalisation largely unchanged at approximately $1.55 trillion, although volatility triggered liquidations of both long and short positions totalling $44.3 million.
Recovery After Geopolitical Pressure Remains Weak
Following the sharp weekend drop — triggered by fears that the United States could resume military action against Iran — Bitcoin has struggled to regain the momentum that allowed it to surpass $82,000 on 6 May.
Even the Trump administration’s decision to delay military strikes and subsequent reports of diplomatic progress failed to provide meaningful support for the cryptocurrency.
In fact, since 14 May, Bitcoin has lost more than $4,500, or nearly 6%, effectively erasing most of its gains from earlier this month.
ETF Investors Use Rebounds as Exit Opportunities
The cryptocurrency’s weakness comes amid a prolonged period of outflows from spot Bitcoin exchange-traded funds.
According to a report by Bloomberg, these capital outflows are largely driven by ETF holders using minor market recoveries as opportunities to sell and reduce risk exposure.
Investors increasingly view price spikes as exit windows rather than signals to accumulate additional exposure.
Nasdaq and Bitcoin No Longer Move Together
This cautious sentiment reflects a broader and more dramatic shift in market dynamics highlighted by social media commentator The Great Martis.
He noted that the once-strong correlation between Bitcoin and the NASDAQ has effectively broken down.
While Bitcoin has suffered a 40% decline from recent cycle highs, the NASDAQ has rallied 26% since the divergence began.
According to this analysis, the divergence suggests that many investors have quietly exited digital assets altogether, reallocating capital instead towards high-performing semiconductor stocks.
This leaves the cryptocurrency market in a fragile position, heavily dependent on speculation and market hype rather than strong fundamentals.
Analysts Warn of Another Potential Capital Exodus
Analysts warn that once the NASDAQ eventually enters a correction, Bitcoin’s underperformance could become increasingly exposed.
Such a scenario could trigger a major outflow of capital from high-risk speculative assets that generate no yield.
To initiate a meaningful recovery, the crypto sector will likely need to attract an entirely new wave of retail participants.
See also: "BlackRock Suffers $70 Million Bitcoin ETF Loss as Outflows Continue for a Fourth Consecutive Day"
