Bitcoin and Ethereum sink to 3-month lows, but a bigger crypto selloff may be ahead

Bitcoin and Ethereum fell to three-month lows Thursday, deepening a cryptocurrency selloff that has erased $550 billion in market value since October.

Bitcoin slumped to $71,317, its lowest level since August, while Ethereum briefly fell below $2,000 to touch $1,983. The declines have pushed the broader crypto market's valuation from approximately $2.94 trillion in early October to $2.39 trillion.

The downturn has coincided with a sharp deterioration in market sentiment. CryptoQuant's Analyst Consensus Index fell from -1.0 to -1.8 standard deviations over seven days, signaling increasingly bearish expectations as investors grapple with persistent selling pressure and uncertainty over the market's next direction.

The latest price decline triggered widespread losses across cryptocurrency derivatives markets as leveraged traders were caught on the wrong side of the downturn.

According to CoinGlass, 125,731 traders were liquidated over 24 hours, with closed positions totaling about $727 million.

Bitcoin accounted for $293.8 million of those liquidations, with bullish positions representing 91.1% of the total. Ethereum followed with $120.2 million, of which 87.7% came from traders betting on higher prices.

Together, Bitcoin and Ethereum accounted for approximately $414 million, or 57% of the market-wide total.

The selling intensified during a four-hour period when nearly $489 million in leveraged positions were liquidated. Long positions accounted for approximately $446 million of those losses, compared with $44 million in short positions.

The largest individual liquidation was a $31 million Bitcoin position on decentralized derivatives exchange Hyperliquid.

The concentration of losses among bullish traders illustrates how the price decline forced exchanges to close leveraged positions, adding to selling pressure as the market struggled to find support.

The downturn comes during weakening institutional demand and contracting liquidity across the crypto market.

Data from SoSoValue showed that US spot Bitcoin exchange-traded funds have recorded approximately $2 billion in net outflows over the past three weeks. Ethereum-focused products are also heading toward a seventh consecutive week of withdrawals, with more than $2.1 billion leaving the funds during that period.

The sustained withdrawals have coincided with a broader contraction in available crypto liquidity.

The supply of major dollar-linked stablecoins contracted by $14.2 billion over 30 days, while Bitcoin's apparent demand declined by 284,000 BTC.

These developments suggest that the latest liquidation wave struck a market already struggling to attract fresh capital, leaving fewer sources of demand to absorb the selling pressure.