Bitcoin fell below $60,000 in intraday trading, sharply rattling the cryptocurrency market. Over 24 hours, about $1 billion of forced liquidations occurred in derivatives markets, while large-scale selling hit the spot market and investor sentiment quickly shrank.

On June 25, CryptoSlate reported bitcoin fell to as low as $59,030 in intraday trading, the lowest level since October last year. It later rebounded to around $61,650 at the time of writing as some bargain buying emerged, but the market mood remained chilled.

Bitcoin fell more than 4 percent over the past 24 hours, and the drop exceeded 50 percent compared with the peak in October last year. Ether fell about 3 percent and traded near $1,650, while major cryptocurrencies including Solana, BNB, Cardano, XRP and dogecoin also weakened across the board.

The shock was larger in derivatives markets. CoinGlass said about 176,000 investors were liquidated over the past 24 hours, with total liquidations reaching about $1 billion. Long-position liquidations, which bet on rising prices, accounted for most at $781 million, while short-position liquidations were $211 million. About $417 million was liquidated in bitcoin-related contracts alone, and ether saw liquidations of about $230 million.

Selling pressure appeared first in the spot market, rather than in the futures market. CryptoQuant data showed that when bitcoin broke below $60,000, more than $470 million in bitcoin sell orders were executed on Binance in just 1 minute. Over the next hour, cumulative selling exceeded $1.2 billion. The market sees the area around $60,000 as a key stop-loss zone, prompting a wave of selling at once.

Supply and demand conditions were also unfavourable. Glassnode analysed that expanding realised losses, outflows from U.S. spot bitcoin exchange-traded funds and an increase in defensive options trading sharply reduced investor sentiment. It assessed that bargain buying did emerge, but was not strong enough to reverse the trend. By Sosovalue's tally, U.S. spot bitcoin ETFs kept up a pattern close to net outflows for 7 consecutive weeks, with outflows exceeding $6 billion over the period.

Market attention is turning again to U.S. monetary policy. At the start of the year, the market expected multiple benchmark rate cuts this year, but it has recently withdrawn most of those expectations. That is because higher-than-expected inflation and continued economic uncertainty tied to tensions in the Middle East have fuelled expectations that the Federal Reserve will keep a tightening stance for longer.

A stronger dollar is also a burden. The dollar index rose to 101.5, the highest level in 13 months. In general, when the dollar and Treasury yields are strong, the investment appeal of non-interest-bearing assets such as bitcoin becomes relatively lower. CryptoQuant's Axel Adler analysed that the market is no longer expecting monetary policy easing, and some investors have started to price in even the possibility of a Fed rate hike in October.

Still, some say the final bottom may not be in yet. James Lavish (제임스 래비시), a co-managing partner at Bitcoin Opportunity Fund, assessed that the current decline differs from a typical capitulation-selling phase. He said a true bottom often comes with heavy trading volume and extreme fear at the same time, and diagnosed the current stage as closer to one in which investors' buying sentiment has weakened.

The market sees the Fed's monetary policy direction, fund flows in U.S. spot ETFs and whether spot buying recovers as key variables that will determine a bitcoin rebound for the time being.