Bitcoin drops to $63,000 amid chip sell-off, ETF outflows and Fed uncertainty

Bitcoin dropped near the $63,000 mark on Wednesday, extending losses as a sell-off in global chip stocks, heavy outflows from spot Bitcoin exchange-traded funds (ETFs), and fresh uncertainty around US Federal Reserve policy rattled risk assets.

The world's largest cryptocurrency was last trading at $63,120, down over 4% in the past 24 hours. The decline erased gains made earlier this week and pushed Bitcoin to its lowest level in more than a week.

Why chip stocks are dragging crypto down

The rout in chip stocks, led by a sharp fall in Nvidia shares, has spilled over into the crypto market. Nvidia, a bellwether for the artificial intelligence and semiconductor sector, fell nearly 7% on Tuesday after a key customer reported weaker-than-expected demand.

Other chipmakers like AMD and Intel also slid, dragging the Nasdaq Composite down by over 2%. Crypto traders often treat Bitcoin as a high-risk, tech-linked asset, so when big tech stocks tumble, Bitcoin tends to follow.

ETF outflows accelerate

Spot Bitcoin ETFs in the US saw net outflows of over $200 million on Tuesday, marking the largest single-day exit in three weeks. The Grayscale Bitcoin Trust (GBTC) and the iShares Bitcoin Trust (IBIT) were the biggest contributors to the outflow.

Analysts say the outflows reflect a broader risk-off mood among institutional investors. Many are booking profits after Bitcoin's rally from $38,000 to $70,000 over the past four months.

$510 million in liquidations hit traders

The sharp drop triggered a wave of forced selling across crypto derivatives exchanges. Data from CoinGlass shows $510 million worth of leveraged positions were liquidated in the last 24 hours, with long positions accounting for nearly 85% of the total.

Bitcoin futures open interest also fell by about $1.2 billion, suggesting traders are unwinding bets rather than adding new ones. The liquidation cascade amplified the sell-off, as automated margin calls forced more selling.

Fed uncertainty adds to the pressure

The Federal Reserve's two-day policy meeting began on Tuesday, with a decision on interest rates expected later this week. Markets are pricing in an 85% chance that the Fed will hold rates steady, but any hawkish tone in the statement could further dent risk appetite.

Higher interest rates make holding non-yielding assets like Bitcoin less attractive compared to bonds or cash. The US dollar index edged higher on Wednesday, adding another layer of headwind for crypto prices.

Investors will closely watch Fed Chair Jerome Powell's press conference for clues on the central bank's outlook for inflation and future rate cuts. A dovish tilt could spark a recovery, while a hawkish surprise might push Bitcoin below the $60,000 support level.