Why Bitcoin suffered a $110 billion wipeout despite its best week of Wall Street news in months

Bitcoin briefly rallied toward $74,000, supported by significant institutional developments, including Morgan Stanley naming a custodian for its spot ETF and Kraken gaining access to the Federal Reserve's payment system. However, the rally reversed, leading to a $110 billion market cap wipeout as the price fell below $69,000.

The selloff was primarily driven by macro forces: the strengthening U.S. dollar following intensified conflict in Iran, which spurred inflation concerns and shifted interest rate expectations, negatively impacting risk assets like tech stocks and Bitcoin. Furthermore, stress in the private credit market, exemplified by BlackRock limiting withdrawals from one of its funds, rattled investors.

This episode highlights that Bitcoin is now more correlated with macro-sensitive assets like the Nasdaq, meaning institutional adoption has made its price susceptible to liquidity conditions and dollar strength. While short-term holders sold into the rally, there are silver linings, such as positive net inflows into U.S. spot Bitcoin ETFs and falling funding rates, suggesting speculative excess has been flushed out, potentially setting a cleaner foundation for future durable rallies.

(Source：CoinDesk)