Bitcoin Prices Plunge Below Two-Year Low Amid ETF Outflows and Hawkish Fed Outlook

Bitcoin has plummeted to its lowest level since 2024, with a year-to-date decline exceeding 30%. The cryptocurrency's price is currently around $59,200, down about 53% from its all-time high of over $126,000 in October last year.

The prolonged outflows from spot ETFs are putting pressure on prices. According to Deutsche Bank, Bitcoin spot ETFs have experienced a cumulative outflow of approximately $6 billion over the past six weeks, marking the longest consecutive outflow period since their launch in early 2024.

This shift from inflows to outflows can amplify downward price movements, as demand for Bitcoin has become a significant force in its price formation over the past two years. Additionally, the market is factoring in the risk that highly leveraged holders may be forced to sell as prices drop below Strategy's average holding cost of approximately $75,699.

The hawkish stance of newly appointed Federal Reserve Chair Kevin Warsh has further pressured risk assets, eliminating market expectations for rate cuts and increasing the likelihood of further rate hikes. This, combined with the strong inflows into several AI and chip ETFs, is diminishing interest in crypto assets.