Why the Crypto Market Is Bleeding: 4 Key Reasons Behind the Latest Correction

The crypto market is seeing red once again, with Bitcoin slipping below the crucial $104,000 level earlier this week. As of the end of May 2025, the mood has shifted noticeably — from FOMO-driven rallies to a wave of sell-offs that have spooked even some seasoned investors.

So, what exactly is causing this latest pullback in the market? Let's break down the main drivers behind this correction.

1. Bitcoin Lost a Major Technical Support Level

First things first — the technicals.

Bitcoin hovering around $100K wasn’t just a psychological milestone; it was also a key level on the weekly chart. The $100K region had served as a base for weeks, with the price consolidating and forming a tight sideways pattern. Many traders expected this consolidation to break to the upside, and for a moment, it did.

However, when BTC rallied past $100K, many market participants opted for a “sell the breakout” strategy — banking on short-term profits rather than long-term conviction. This led to a sharp pullback back to the weekly support zone. And unfortunately, it didn’t hold.

Now that Bitcoin has broken below $104K, traders and analysts alike are eyeing the next major levels — potentially $98K or even lower if bearish momentum continues.

2. ETF Investors Hit the Exit Button

The euphoria around spot Bitcoin ETFs in the US had fuelled the rally for weeks, with 10 consecutive days of positive inflows. But that streak came to a screeching halt on 29 May 2025, when the market recorded a massive outflow of $346 million.

This sudden reversal in ETF sentiment caught many off guard. Institutional investors pulling funds out of Bitcoin is never a good sign, and the market reacted swiftly.

The outflow not only added selling pressure but also injected a dose of bearish sentiment into an already jittery market.

3. Leverage Got Out of Hand — And Traders Paid the Price

When markets soar, so does the appetite for risk. And over the past couple of weeks, leverage in the crypto futures market hit concerning levels.

According to data from Coinglass, over $683.4 million worth of futures positions were liquidated in just 24 hours leading up to 30 May. Out of that, a staggering $617.8 million were long positions.

Many of these traders were using high leverage during an unstable market — a classic recipe for disaster. In fact, one trader from the crypto community around influencer James Wyn reportedly flipped between long and short positions within the same week and lost over $100 million.

It’s a brutal reminder that leverage is a double-edged sword — and during market tops, it’s more of a liability than a strategy.

4. Global Uncertainty and Regulatory Fears Looming

Lastly, macroeconomic and geopolitical concerns are adding fuel to the fire.

Trade tensions between the United States and China have flared up again. Negotiations have stalled, and no meaningful resolution is in sight. This deadlock is weighing heavily on investor sentiment across global markets, including crypto.

The uncertainty has many investors stuck in limbo — unsure whether to hold, exit, or hedge. That indecisiveness translates into volatility, and when paired with bearish headlines and poor liquidity, it often results in abrupt market corrections.

On top of that, regulatory noise from the US and other jurisdictions is making it harder for institutions to confidently allocate capital to crypto. The market remains in a fog of uncertainty.

So, Where Do We Go From Here?

While this correction may sting, it’s worth noting that pullbacks are a natural part of any healthy market cycle — especially in crypto.

Bitcoin and other major assets remain in long-term uptrends, and corrections like these often serve to shake out weak hands, reset leverage, and prepare the market for its next leg up.

If you're a long-term believer in the crypto space, this may simply be a bump in the road — albeit a painful one. As always, it pays to zoom out, stay informed, and avoid emotional decision-making during high-volatility periods.

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