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Bitcoin is stuck in a slow-motion squeeze, and the pressure is coming from all directions at once. ETF outflows are relentless, on-chain activity is thinning out, and a massive cluster of leveraged positions is sitting right below the market — waiting to detonate if prices slip toward $60,000. Here is where things actually stand and why the next few weeks could get ugly.
The ETF Bleed Won’t Stop
U.S. spot Bitcoin ETFs have shed roughly $4.5 billion in net outflows across the first eight weeks of 2026, according to SoSoValue data. That includes a brutal five-week stretch starting in late January that alone erased approximately $4 billion from the 12-fund complex. BlackRock’s iShares Bitcoin Trust (IBIT) — the product that became the fastest ETF in history to cross $70 billion in assets — has hemorrhaged over $2.1 billion during that window. Fidelity’s Wise Origin fund (FBTC) lost another $954 million. The most recent week printed $316 million in additional outflows, and Ethereum ETFs are mirroring the pain with five consecutive red weeks of their own.
For context, cumulative net inflows into spot Bitcoin ETFs still stand at roughly $53–54 billion since launch, down from a peak near $63 billion around the October 2025 all-time high. Total ETF assets sit near $85 billion, representing about 6.3% of Bitcoin’s market capitalization. The structure is not collapsing — but the momentum that once made ETF flows a reliable bullish signal has completely evaporated. CryptoQuant analyst J.A. Maartun put the total drawdown from peak at $8.3 billion, calling it the weakest period on record for the fund category. The sustained outflow pressure has contributed to Bitcoin dominance climbing to 60% even as its five-month losing streak rewrites the record books, with altcoins bleeding even faster than BTC itself. Meanwhile, gold ETFs have absorbed roughly $16 billion in inflows over the past three months, making the rotation away from crypto toward traditional safe havens painfully obvious.
On-Chain Activity Is Flashing Red
The network itself tells a worrying story. Bitcoin’s 7-day moving average of active addresses dropped to approximately 660,000 late last year, the lowest reading in twelve months, according to data compiled by The Block. While seasonal slowdowns are normal, the decline has persisted well into 2026 and coincides with fading interest in Bitcoin-native protocols like Ordinals and Runes that had previously boosted network traffic. Daily miner revenue has fallen from an average of $50 million in Q3 2025 to roughly $40 million, with transaction fees making up only a sliver of that total — a sign that genuine demand for Bitcoin blockspace is weak.
This divergence between price action and user engagement matters. Bitcoin can still process significant transaction volume in dollar terms, but fewer unique participants are driving it. When a network’s value depends increasingly on a shrinking base of larger holders rather than broadening adoption, it becomes structurally more fragile — and more vulnerable to the kind of cascading sell-offs that leverage-heavy markets are built to produce.
The $60,000 Liquidation Cliff
With BTC trading around $64,000–$66,000 as of late February, the market is uncomfortably close to what Bloomberg recently described as a critical liquidation trigger at $60,000. Deribit options data shows the largest cluster of put contracts paying off below that level, and just beneath it sits the 200-week moving average near $58,000 — a line that technical analysts have long treated as the ultimate bull-bear dividing line. According to data from early 2026, roughly $10.6 billion in long exposure remains clustered below $84,000, compared to just $2 billion in shorts above $104,000. That asymmetry means any sustained move lower could trigger a cascading liquidation event reminiscent of October 2025, when $19 billion in leveraged positions were wiped out in a single day following Trump’s 100% China tariff shock.
Bank of America’s broader macro warning adds another layer. Strategist Savita Subramanian flagged the S&P 500 as expensive on 18 of 20 proprietary valuation metrics, with nine exceeding dot-com bubble peaks. BofA’s year-end 2026 target of 7,100 — the most bearish on Wall Street — implies just 4–5% upside from current levels and projects a 5–10% contraction in price-to-earnings multiples. For Bitcoin, which has consistently traded as a high-beta risk asset since October, equity market compression directly translates into reduced appetite for speculative crypto exposure — a dynamic already visible in how the Fed’s recent $18.5 billion repo injection failed to lift crypto sentiment even as liquidity briefly improved in traditional markets.
Where the Smart Money Is Looking
Not everything is doom and gloom. Solana ETFs quietly attracted $13.9 million in net inflows during the same week that Bitcoin and Ethereum bled, suggesting capital is rotating within the crypto complex rather than leaving entirely. Bloomberg senior ETF analyst Eric Balchunas noted that the broader structural footprint of Bitcoin ETFs remains historically significant, with cumulative inflows still far exceeding the $5–15 billion that would have counted as success at launch. And Seeking Alpha analysis argues that the recent moderation in forced liquidation volumes may signal a forming bottom, with conditions improving for price stabilization — barring a true black-swan macro shock.
But the near-term setup is precarious. The combination of sustained institutional de-risking through ETFs, thinning network participation, and a massive wall of leveraged longs sitting between current prices and the $60,000 trigger zone creates conditions where any catalyst — a hot inflation print, a tariff escalation, a surprise Fed hawkishness — could tip the market into a liquidation cascade. For now, the bulls need to hold $60,000 or risk finding out exactly how deep the leverage trap goes.
