Bitcoin Stumbles, Breaking a Critical Support Level

Bitcoin fell sharply to trade below $65,000 on Thursday, marking one of its weakest sessions in July. The decline, part of a broader slump across digital assets, has rattled both short-term traders and long-term holders. The trigger? A combination of macroeconomic uncertainty, fading risk appetite, and net outflows from spot Bitcoin ETFs.

The move places Bitcoin in a vulnerable technical position as investors now evaluate whether $60,000 will hold as the next psychological line in the sand.

ETFs See Net Outflows as Sentiment Cools

Much of the selling pressure has come from institutional retracement. Several U.S.-based spot Bitcoin ETFs, including those from BlackRock and Fidelity, saw back-to-back days of net redemptions, signaling a waning appetite from larger players.

After months of inflows, these redemptions have reversed the bullish narrative that pushed Bitcoin near its record highs earlier this year. With rising yields and renewed rate-hike fears resurfacing, safe-haven flows are moving toward U.S. Treasuries, not crypto.

Altcoins Follow Bitcoin Into the Red

It wasn’t just Bitcoin. The sell-off rippled across the crypto complex:

• Ethereum (ETH) dropped below $3,300

• Solana (SOL) lost over 6% on the day

• Avalanche (AVAX) and Polygon (MATIC) saw double-digit weekly losses

DeFi protocols and meme coins were hit harder, showing once again that Bitcoin’s direction sets the tone for the broader ecosystem.

Macroeconomic Headwinds: Fed, CPI, and Dollar Strength

Traders are now wrestling with a more hostile macro backdrop. The Federal Reserve’s hawkish tone has reignited fears that interest rates may stay higher for longer, especially after the latest CPI reading came in hotter than expected.

The U.S. Dollar Index (DXY) climbed to its highest level in over two months, further pressuring crypto assets priced against fiat. Historically, a strong dollar is inversely correlated with crypto strength, and that dynamic appears to be reasserting itself.

Technical Breakdown and What Comes Next

From a chart perspective, the break below $65,000 is significant. Analysts have highlighted a head-and-shoulders pattern on the 4-hour chart, with neckline support now broken. Immediate support lies at $62,500, with stronger demand likely at the $60,000–$61,000 region.

If that floor cracks, Bitcoin could retest its 200-day moving average near $58,000, a level not seen since Q1. However, bulls argue that macro weakness could lead to a policy pivot later this year, especially if labor data starts softening.

On-Chain Metrics Signal Neutral to Bearish

On-chain data supports the cautious tone:

• Exchange inflows have increased, signaling potential sell-side pressure

• Long-term holder activity is steady, but new wallet growth has slowed

• Funding rates have turned slightly negative across perpetual futures markets

In short, momentum is cooling, but not in full panic mode yet. A sharp rebound could occur if macro data surprises to the downside, or if Bitcoin ETF inflows reaccelerate.

Conclusion: A Crucial Juncture for Crypto Bulls

Bitcoin’s slide below $65,000 is more than a number—it’s a sentiment barometer. With the halving now in the rearview mirror, and institutional flows cooling, the crypto market is looking for its next catalyst.

Will it be Federal Reserve policy, regulatory clarity, or renewed ETF demand? Time will tell. But for now, caution rules, and traders are bracing for more volatility.