Bitcoin and Ethereum experienced significant price volatility this week as the cryptocurrency market responded to US consumer price index (CPI) data and escalating Middle East geopolitical tensions. Bitcoin fell below $63,000 on the 13th following leverage liquidation, briefly recovered toward $65,000 after lower-than-expected US CPI reduced Federal Reserve rate hike concerns, then retreated to the $63,000 range following US airstrikes on Iran. Despite price swings, market internal metrics showed improvement, with US spot Bitcoin and Ethereum exchange-traded funds recording net inflows, on-chain buying activity strengthening, and selling pressure easing. Institutional capital notably shifted toward Ethereum, which gained approximately 11% over 7 trading days, outperforming Bitcoin during the same period as BlackRock's ETHA ETF attracted significant inflows and Robinhood launched a Layer 2 network expansion.
Bitcoin Falls Below $63,000 on Leverage Liquidation Before CPI-Driven Recovery
According to global cryptocurrency market platform CoinGecko, Bitcoin dropped below $63,000 on the 13th due to the impact of leverage long position liquidations. The decline did not escalate into large-scale panic selling, and the liquidation volume was not significant compared to major liquidations over the past month. Market participants interpreted the drop as a process of unwinding excessively accumulated leverage.
The market sentiment reversed quickly following the release of US CPI data that came in lower than market expectations. Concerns about Federal Reserve interest rate hikes eased, and Bitcoin recovered to the $65,000 level. US spot Bitcoin ETFs also turned to net inflows as institutional funds began returning to the market.
However, investment sentiment remained frozen as the Fear & Greed Index stayed in the 'fear' zone throughout the week. Bitcoin retreated to the $63,000 range after US airstrikes on Iran increased geopolitical uncertainty in the Middle East. Rising international oil prices and uncertainty surrounding US monetary policy also dampened risk asset sentiment.
Ethereum Gains 11% Over 7 Days as Institutional Funds Flow to ETFs
Ethereum emerged as the most prominent asset this week. US spot Ethereum ETFs recorded net inflows during the first 3 trading days of the week that exceeded the entire previous week's total. Institutional funds concentrated particularly in BlackRock's ETHA.
Expectations for ecosystem expansion, including Robinhood's Layer 2 network launch, combined with these capital flows to drive Ethereum approximately 11% higher over the past 7 trading days. This return exceeded Bitcoin's performance during the same period.
While Bitcoin also saw continued ETF net inflows and spot buying activity, large-scale outflows and inflows alternated day-to-day, making it difficult to determine a clear directional commitment from institutions. In contrast, Ethereum maintained relative strength as ETF fund inflows coincided with expanded network utilization.
On-Chain Metrics Show Market Health Improvement Despite Fear Sentiment
On-chain indicators captured signals that market health improved compared to previous periods. The Realized Value HODL Ratio (RHODL Ratio), which compares assets held by long-term holders versus new investors, declined, but Bitcoin's price did not collapse significantly. This indicated the market absorbed supply during the so-called 'hand-changing' process as holdings transferred from long-term holders to new investors.
Funding Rate also decreased rapidly in the latter half of the week. With price declines limited while leverage was substantially unwound, market overheating pressure also reduced.
Analysts assessed that while short-term volatility may continue depending on geopolitical risks and US monetary policy, market health improved compared to before through ETF fund inflows, easing selling pressure, and leverage normalization. However, many evaluations noted it is too early to conclude this marks the beginning of a full-scale bull market. Given remaining macroeconomic variables and geopolitical uncertainties, the current market is closer to a process of building a bottom rather than a trend reversal.
FAQ
What caused Bitcoin to fall below $63,000 on the 13th?
Bitcoin dropped below $63,000 on the 13th due to leverage long position liquidations. According to CoinGecko, the decline was interpreted as a process of unwinding excessively accumulated leverage rather than large-scale panic selling, with liquidation volumes not significant compared to major liquidations over the past month.
How did Ethereum perform compared to Bitcoin this week?
Ethereum gained approximately 11% over the past 7 trading days, outperforming Bitcoin during the same period. US spot Ethereum ETFs recorded net inflows during the first 3 trading days that exceeded the entire previous week, with institutional funds concentrating in BlackRock's ETHA, while ecosystem expansion expectations from Robinhood's Layer 2 network launch contributed to the relative strength.
What on-chain indicators showed market health improvement?
The Realized Value HODL Ratio (RHODL Ratio) declined but Bitcoin's price held, indicating the market absorbed supply during the hand-changing process from long-term holders to new investors. Funding Rate decreased rapidly in the latter half of the week, with limited price declines while leverage unwound substantially, reducing market overheating pressure.
