Six-Week Slide: Bitcoin Tests 2024 Lows as $BTC Plays Musical Chairs With the AI Trade 🪑

Bitcoin fell to roughly $58,000 on Thursday, its weakest level since 2024, as a wave of selling tied to U.S. spot ETF outflows, a hawkish Federal Reserve outlook and a stronger dollar pulled major cryptocurrencies sharply lower. The token briefly touched an intraday low near $58,000 before bouncing to about $59,400, down 2.5% over 24 hours and roughly 5% on the week, according to CoinDesk data. Ether dropped as low as $1,550, solana slipped to around $64, XRP traded near $1.07 and dogecoin fell to $0.07269, with solana completing a 75% slide from its September peak.

The move came after the U.S. Bureau of Economic Analysis reported that the Personal Consumption Expenditures price index climbed 4.1% year over year in May, its highest level in three years, with core PCE up 3.4% and 0.3% month over month. With Fed Chair Kevin Warsh signaling that the central bank's next move is likely a rate hike rather than a cut, economists at Bank of America now project three hikes this year lifting rates to 4.25% to 4.5% by year-end, while Deutsche Bank's analysts said the drop reflects "a hawkish shift in Federal Reserve expectations, sustained outflows from U.S. spot bitcoin exchange-traded funds, a confidence shock following Strategy's first BTC sale since 2022, and a broader rotation of investor capital into artificial intelligence." U.S. spot bitcoin ETFs recorded six consecutive weeks of net outflows totaling about $6 billion, per Deutsche Bank, and another $469.08 million exited on June 24, taking total net assets across U.S. spot bitcoin ETFs to $73.87 billion.

The selloff triggered heavy derivatives damage. CoinGlass data shows 217,685 traders were liquidated over the past 24 hours, totaling $1.48 billion, with longs accounting for $1.21 billion, including a single $38.05 million BTC-USD position wiped out on Hyperliquid. Bitcoin's futures open interest climbed to 763K BTC, the most since June 4, while annualized funding rates flipped negative, a sign traders are paying a premium for downside exposure. Yet the same setup has traders eyeing a potential short squeeze: a CoinGlass order-book snapshot shows 6,900 BTC ($409 million) in resting bids between the current price and $50,000, against just 1,570 BTC ($93 million) in resting sell orders up to $70,000, and Glassnode's liquidation heatmap shows clustered liquidation risk above current prices rather than below. "We're seeing a bit of a sell-off in AI," Carlos Guzman, vice president of research at GSR, told Decrypt. "Crypto is reacting to that risk-off sentiment."

Spot data underscored the strain. As $BTC fell below $59,100 on Wednesday, Glassnode reported the number of bitcoin held at a loss rose to a record 10.83 million BTC, exceeding past bear-market peaks near 10.5 million, while long-term holders control a record 14.8 million coins, with more than one-third now in the red. Wallets holding 10 to 10,000 BTC have sold 45,074 bitcoin in the past eight days, according to Santiment. The 90-day Net Realized Profit and Loss is averaging -$205 million per day, and Bitcoin's daily Relative Strength Index fell to around 30, near oversold territory. "Days like today are undoubtedly painful," Juan Leon, senior investment strategist at Bitwise, told Decrypt. "But step back. We've seen this movie before."

The crypto decline tracked equities but did not follow their rebound. Micron jumped about 15% on Thursday after a sales forecast that topped Wall Street estimates, lifting Nasdaq 100 futures 1.8% and sending South Korea's Kospi up as much as 6%, while bitcoin kept sliding. Bitcoin is hovering near its 200-week moving average, a long-term trend line that preceded roughly nine months of weakness in 2015, six months in 2018 and about six quarters after the 2022 collapse, according to FxPro. Gerry O'Shea, head of global market insights at Hashdex, told Decrypt he expects bitcoin to keep trading between $60,000 and $70,000 in the near term, with traders looking to the July 2 U.S. jobs report and the July 14 consumer price index as the next macro tests, while Wintermute OTC trader Jasper De Maere wrote in a note that "flows are suggesting traders have started going into summer recess" and that consolidation could continue "at the mercy of the equity market which has the potential to pull crypto down alongside it in case of a further risk-off rotation."