Bitcoin faces $70K test as Hyperliquid’s stablecoin supply rises 8% – Capital rotation?
Reading on-chain data at the right time can give investors an early edge.
At the current stage of the cycle, timing matters more than ever. From a technical view, traders have wiped $10 billion+ from the market this week, dragging Bitcoin closer to $70k.
With major liquidity clusters sitting on both the upside and downside, the next move could trigger a significant liquidity sweep in either direction.
That said, several early indicators suggest bulls are gradually losing control. Bitcoin sentiment has dropped into extreme fear, a level that has historically signaled capitulation events.
At the same time, more than 45% of short-term holders (STHs) are now underwater, increasing the likelihood of panic selling as market participants begin to test their conviction.
Source: CryptoQuant
Notably, the same trend is visible among U.S. investors.
According to CryptoQuant, Bitcoin’s Coinbase Premium Index (CPI) recently dropped to a more than three-month low of -0.17, highlighting weak demand from the U.S.-based participants.
This weakness also shows up in ETF flows, with Spot Bitcoin ETFs recording more than $1.4 billion in net outflows this week alone.
Taken together, these signals suggest that bears currently hold the advantage, leaving Bitcoin [$BTC] vulnerable to further downside.
As a result, the $70k support level looks increasingly difficult to defend, especially when factoring in another key market signal.
Bitcoin sees liquidity shift as stablecoin outflows surge
The timing of moves in a risk-off market rarely looks like coincidence.
With on-chain signals turning bearish, stablecoin outflows reflect classic flight-to-safety behavior. According to DeFiLlama data, more than $2 billion in stablecoins have exited the market, pointing to increased hedging activity from investors.
But these liquidity shifts go beyond just capital leaving Bitcoin.
Notably, stablecoin supply on Hyperliquid [$HYPE] has increased by over 8.25% over the same period, translating into $500 million+ in inflows. This move lines up with the $HYPE/$BTC ratio rising 10%+ this week, highlighting where liquidity is actually rotating.
The key takeaway? This trend may only just be starting.
Source: X
As the analyst pointed out, over $8 billion in $USDC now sits on Hyperliquid, showing a large pool of stablecoin liquidity on the platform. Through its deal with Circle, this $USDC generates yield, with a portion expected to flow into buybacks.
Based on rough estimates, this could add around $700k+ per day in additional buyback pressure, on top of what’s already happening today. In essence, the possibility of $HYPE’s continued dominance over Bitcoin remains, with the $HYPE/$BTC ratio’s 63% Q2 rally potentially just the start.
As a result, Bitcoin’s next move increasingly leans toward bear control.
With on-chain signals turning bearish, liquidity exiting the market, stablecoins flowing into $HYPE, and the $HYPE/$BTC ratio expanding, Bitcoin’s plunge into extreme fear reflects rising downside pressure across the market.
Final Summary
- Bitcoin shows weakening momentum with extreme fear, outflows, and bearish signals pointing to more downside risk toward $70k.
- Liquidity is rotating into $HYPE, with stablecoin inflows and buyback support strengthening its relative outperformance versus Bitcoin.
