Bitcoin Breaks Below $75K, Is the Final Drop Coming?

Original Author: Ma He, Foresight News

On May 28, after repeatedly battling the $75,000 mark, the price of Bitcoin ultimately failed to hold and has now slipped to around $74,000. ETH is oscillating around the $2,000 level. Altcoins that previously experienced strong rallies, such as NEAR, WLD, and ONDO, have all seen pullbacks.

The current market Fear & Greed Index has dropped to 34, indicating a state of fear in the market.

Data from Coinglass shows that over the past 24 hours, total open interest liquidations across all networks reached $470 million, with long position liquidations amounting to $420 million.

Over the past few weeks, Bitcoin has fluctuated repeatedly within the $75,000 to $80,000 range, briefly attempting to break above $78,000, but failing to hold that level. Over the last 30 days in the crypto market, BTC has fallen by 3.5%, ETH has dropped approximately 12%, and stablecoins have also declined by 0.15%.

On the macro data front, Brent crude oil edged up to $97/barrel, silver slightly declined to $73, while the Dow Jones Industrial Average rose by 182.60 points (+0.36%), reaching a new record high. The S&P 500 index increased by 1.24 points (+0.02%). The Nasdaq Composite Index stood at 26,674.73 points, up 18.55 points (+0.07%). Spot gold lost the $4,400/oz level for the first time since March 27, dropping over $50 intraday, a decline of 1.25%.

US-Iran Conflict "Reignites"

Geopolitical risks in the Middle East have become another significant external variable. Since 2026, tensions and de-escalations between the US, Iran, and related parties have alternated around issues like Iran's nuclear facilities and the safety of navigation through the Strait of Hormuz. In recent months, the US has employed a strategy combining military action and diplomatic pressure, accompanied by air strikes, rumors of port blockades, and repeated ceasefire negotiations.

Even during windows of ceasefire or diplomatic progress, the market's pricing of a "reignition" risk has not completely dissipated.

In the early hours of May 28, US President Donald Trump stated that the US would continue to control Iran's assets. Iran has begun to offer what we want. If things don't go well, US Defense Secretary Pete Hegseth will complete the job. We can end the war with Iran quickly, and we may have to do so. However, I don't think we need to.

Around 5:00 AM Beijing time, according to Iranian media Fars News, local residents reported hearing explosions near the port of Bandar Abbas in southern Iran.

A US official told Reuters that the US military had conducted new strikes on an Iranian military base that posed a threat to US forces and commercial navigation in the Strait of Hormuz. The US military also intercepted and shot down several Iranian drones that posed a threat to US forces and commercial maritime traffic.

Tensions surrounding the Strait of Hormuz have once again become a focal point, exacerbating oil price volatility and putting pressure on global risk assets. In this environment, Bitcoin has exhibited more risk-asset characteristics rather than the traditional safe-haven function of "digital gold." Geopolitical uncertainty boosts demand for the US dollar and US Treasuries while suppressing risk appetite, leading to capital outflows from the crypto market.

ETF Net Outflows Signal Institutional Profit-Taking

Since their launch in early 2024, US Bitcoin spot ETFs had accumulated net inflows exceeding $57 billion, becoming one of the main channels for institutional allocation to Bitcoin. However, entering May 2026, the trend has clearly reversed.

According to tracking data from SoSoValue, between May 5 and 26, US Bitcoin ETFs recorded consecutive net outflows. Daily outflow sizes expanded from tens of millions of dollars to a maximum of $600 million, occurring twice.

The situation for Ethereum spot ETFs is similarly concerning. Like Bitcoin, they have seen significant net outflows since the beginning of May.

This may not simply be "panic selling," but rather a systematic realization of profits by early investors. ETF holders include traditional asset managers, family offices, and hedge funds. After Bitcoin recovered from its lows to the $75,000-$80,000 range, they chose to lock in profits through the redemption mechanism. Some funds may have rotated into higher-performing AI-related tech stocks – the S&P 500 and Nasdaq indices hit new highs during the same period, while the crypto market underperformed overall, highlighting capital reallocation within the risk asset class.

Future Outlook

Wintermute stated that two consecutive weeks of over $1 billion in ETF outflows for BTC (following six weeks of inflows) indicate institutions are taking advantage of the strong position to realize recent positive returns. More noteworthy is AI. Nvidia delivered textbook-beating performance, yet its stock barely moved after hours. Incremental beats no longer move the needle. If the AI momentum fades, the macro picture (record-low consumer confidence, sticky inflation, hawkish Fed under new leadership) will gain more weight, and cryptocurrencies will not be immune.

BTC's long-term structure remains intact (reserves at multi-year lows, long-term holders accumulating, CLARITY progressing, HYPE doing what major early-stage tokens should do). However, short-term capital flows drive prices, and currently, they are negative. The $75,000 to $76,000 range is a key line for BTC. Holding this level would allow BTC to challenge $80,000 again. Breaking below could lead to a rapid slide towards $70,000 to $72,000.

Glassnode tweeted that at a price of $76,000, approximately 7.75 million BTC are in a loss position. This supply overhang is a structural characteristic of bear markets, typically only resolved when weak hands capitulate.

BIT tweeted that, for Bitcoin, the sustained rally over the past period largely depended on the interplay between institutional demand and available market supply. Over the past year, Bitcoin spot ETFs and Strategy have been significant sources of this demand. When ETF inflows accelerated and Strategy continued to increase its BTC holdings, the price of Bitcoin typically trended higher.

BIT noted that the combined net buying volume from ETFs and Strategy has now fallen to just $870 million, primarily due to significant capital outflows from ETFs, shifting them from net buyers to net sellers. Until ETF inflows stabilize and recover, Bitcoin may continue its range-bound consolidation in the near term.

Analyst Murphy suggested observing the current BTC market state through the on-chain metric "Short-Term Dollar Value Held Weight," which reflects the proportion of dollar value carried by short-term coin turnover. This metric captures short-term trading behaviors like speculation, arbitrage, profit-taking, or panic selling. Currently, this weight has dropped to historically extremely low levels, seen only in the deepest bear market bottoms over the past 15 years. This implies a significant cooling of short-term turnover, with economic value shifting towards long-term holdings, indicating a stage characterized by low volatility, accumulation, or clear bottoming patterns.

Murphy assesses that based on this, the current market could be in one of three phases: a bear market bottom; a secondary bottom, potentially with one final dip; or accumulation before a bull run begins. However, rational judgment suggests temporarily ruling out pre-bull run accumulation. He does not recommend going all-in on a single scenario and suggests adopting a diversified position strategy to address different outcomes. The relative position of the long-term trend indicates Bitcoin is near the bottom.