Why are Bitcoin price (BTC USD), Ethereum, XRP and Dogecoin falling despite ETF inflows as crypto liquidations hit $465 million?

Bitcoin's price faced significant pressure this week, dropping to an intraday low of $80,836 during a sell-off on Wednesday, with trading hovering around the $81,000 mark by Thursday. This decline is notable despite the continued influx of investments into spot Bitcoin exchange-traded funds (ETFs), which have reportedly attracted over $1 billion in three consecutive days, as reported by Bitcoin.com News.

On Wednesday alone, data from Benzinga indicated that spot Bitcoin ETFs recorded net inflows of $528.4 million. However, these inflows have not yet translated into a sustained recovery in Bitcoin's price. Analysts from Bitfinex emphasized that further institutional demand is essential for Bitcoin to break through the critical resistance level of $84,000. They noted that the average cost basis for ETF investors is approximately $84,333, a benchmark that could influence Bitcoin's ability to rebound.

The downturn in Bitcoin's value also impacted the broader cryptocurrency market, with major altcoins such as Ethereum, XRP, and Dogecoin experiencing declines of more than 4% on Thursday, according to Benzinga.

In the wake of these price drops, the crypto market saw significant liquidations, with CoinGlass reporting that $465.56 million in crypto positions were liquidated within a 24-hour period, affecting over 103,000 traders. The majority of these liquidations were from long positions, which totaled $427.13 million, while short liquidations accounted for $38.43 million. Binance was the leading exchange for liquidations, responsible for 42.5% of the total. The largest single liquidation recorded was an $11.78 million long position in BTCUSDT, executed at a price of $83,526.24.

The outlook for Bitcoin remains uncertain as traders await signs of recovery. The next critical test for the leading cryptocurrency is whether it can regain its footing and approach the $84,000 resistance level. Trader Benjamin Cowen has cautioned that if Bitcoin fails to reclaim the $83,000 mark and continues to drop below $82,000, it could potentially fall into the low to mid $70,000 range. It is important to note that this scenario is speculative and not a confirmed prediction.

Despite the substantial inflows into ETFs, the inability of Bitcoin to maintain its price suggests that traders are closely monitoring market demand and waiting for indications of a recovery that could help the cryptocurrency overcome key resistance levels.