The recent cryptocurrency market sell-off, which triggered approximately $1.6 billion in liquidations over the past 24 hours, represents the largest deleveraging event in the crypto market since February. However, underlying market data suggests the correction is being driven primarily by retail investors and leveraged traders rather than long-term holders, according to Javier Molina, Market Analyst at eToro.
Recent market activity has been accompanied by roughly $3.67 billion in outflows from spot bitcoin exchange-traded funds (ETFs) over the past two weeks. At the same time, spot demand for bitcoin has fallen to its lowest level of the year, reflecting a broader shift in investor capital towards equities and artificial intelligence-related investments.
Commenting on the market dynamics, Javier Molina, Market Analyst at eToro, said: “The $1.6 billion in liquidations recorded over the past 24 hours marks the largest deleveraging event in the crypto market since February. However, the more important signal lies beneath the headline. Spot bitcoin ETFs have seen roughly $3.67 billion in outflows over the last two weeks, while spot demand has fallen to its lowest level of the year amid a broader rotation of capital towards equities and AI-related investments.
“What’s important to understand is that the current sell-off appears to be driven primarily by retail investors, newer market participants and leveraged traders rather than long-term holders. ETF outflows should not automatically be interpreted as institutional selling, as a significant portion of ETF exposure is ultimately held by retail investors.
“Despite the recent correction, bitcoin continues to trade above its realised price, the market’s aggregate cost basis, suggesting this remains a reset in positioning and sentiment rather than the kind of broad capitulation typically associated with deeper bear markets. The key question now is whether selling pressure remains concentrated among recent buyers or begins to spread more broadly across the market.”
According to eToro, bitcoin’s ability to remain above its realised price indicates that the market has not yet entered a phase typically associated with prolonged bear market conditions. Instead, current price action may reflect a recalibration of investor sentiment and positioning following an extended period of market optimism.
Market participants will now be closely watching whether selling pressure remains confined to recent entrants and leveraged positions, or whether it begins to impact longer-term holders, which could signal a more significant shift in market structure.
