Bitcoin Falls Below $63k: How a U.S. Chip-Stock Sell-Off Spreads Into the Crypto Market?

Bitcoin weakened in the early morning of July 17. Since Wednesday late night, the nearly two-week high of $65,385 has gradually fallen, with the low dipping to $62,700. As of July 17, 2026, according to Gate market data, Bitcoin is at $62,829.20, down 1.8% over the past 24 hours. Ethereum slid from the 24-hour high of $1,929 all the way down to $1,820, and is currently around $1,827, down 2.62%, again losing the $1,900 level.

Over the past 24 hours, a total of 85,771 people across the entire network were liquidated, with total liquidation amounts reaching $332 million. Long positions accounted for $280 million (about 84%), while short positions liquidated amounted to $51.76 million. In just the last 12 hours, liquidation totaled $204 million, with selling pressure noticeably concentrated around the time just before and after the Asian session opened. This leveraged wipeout of more than $300 million was not rooted in any black-swan event within the crypto market itself, but came from a sharp selloff in the US stock chip sector across the ocean.

How do chip stock selloffs trigger chain reactions in the crypto market?

On July 16, TSMC released its second-quarter earnings report. Net profit surged 77% year over year, and the gross margin of 67.7% came in above expectations. The full-year revenue guidance was raised from 30% to 40%. However, this so-called “perfect answer” sparked the opposite reaction from the market— the Philadelphia Semiconductor Index plunged 4.29% in a single day, retreating more than 22% from the mid-June peak, and officially slipped into a technical bear market.

The logic behind market concerns isn’t complicated: TSMC raised its full-year capital expenditure guidance significantly from $52 billion to $56 billion, up to $60 billion to $64 billion. Against the backdrop of AI hardware investment having already continued to balloon, expanding capex further instead led the market to deepen worries about whether the “investment return cycle” is sustainable. The memory chip sector was hit first—SK Hynix ADR fell 13.48%, SanDisk dropped 12.63%, Seagate slid 10%, Western Digital fell 9%, and Micron’s pullback from its historic high is already more than 30%.

This selloff quickly spread to the entire US tech sector. The Nasdaq fell 1.47% to close at 25,881.95, while the S&P 500 dropped 0.51% to close at 7,533.77. Risk-off sentiment flowed into the crypto market at the same time— and the crypto market was precisely in a fragile window with highly concentrated leverage.

Why has $65,000 become a level that bulls repeatedly hit but couldn’t hold?

Bitcoin briefly broke above $65,000 on July 15, but failed to hold effectively and then entered a pullback. From a technical structure perspective, the $65,000–$65,500 zone is the recent area with heavy supply. After topping at $65,588, BTC kept falling, accelerating intraday down to around $63,460, and the short-term long structure was officially broken.

Moving averages also issued bearish signals. Although price rose above the EMA15 and EMA30 short-term moving averages—showing signs that the short-term rebound had stabilized—price remained capped below the EMA60 and EMA90. Moreover, the 50-day moving average is clearly below the 200-day moving average (about $73,700), forming a “death cross,” indicating that the mid- to long-term bearish trend has not been fully reversed.

In other words, $65,000 is not just a psychological level, but a spot where multiple technical resistances overlap. The sell pressure from trapped holders seeking to exit, the need for short-term profit-taking, and the shorts actively defending that zone together form a barrier that longs find hard to overcome. The brief optimism brought by CPI and PPI both coming in below expectations quickly dissipated under the impact of the chip-stock selloff, and price fell back into a ranging band of $63,000–$65,000.

What does liquidation data reveal about leverage structure and market sentiment?

In the total liquidation amount of $332 million, long positions account for as much as 84%. This stark ratio clearly outlines the market’s prior positioning structure—supported by the bullish influence of easing inflation data, large amounts of leveraged long capital flowed in, betting that Bitcoin would break above $65,000 and continue upward.

However, when the external macro shock (chip stock selloff) arrived, price failed to break through resistance and instead turned downward. Those leveraged long positions then became the main force for forced liquidation. The largest single liquidation occurred in the ETH/USDT trading pair, worth $6.57 million—further confirming that Ethereum absorbed heavier selling pressure in this pullback. Its 2.62% drop is significantly higher than Bitcoin’s 1.13%.

From the time distribution perspective, liquidation totaled $204 million in the last 12 hours, with selling pressure highly concentrated around the Asian session opening. This implies that after the US market’s overnight close, sentiment transmission was released concentrated at the time the Asian market opened, forming a typical “cross-market risk transmission” pattern.

The Fear and Greed Index is currently 33. While it has risen somewhat from 27 earlier, it is still in the panic zone. This suggests that although market sentiment has marginally improved, risk appetite has not switched to a full-on expansion mode.

Is there a divergence between ETF flows and liquidation data?

While liquidation data surged sharply, US spot Bitcoin ETFs recorded net inflows of $181 million and $108 million on July 14 and July 15, respectively, reversing the prior streak of consecutive outflows.

This divergence is worth deeper analysis. Net ETF inflows are often viewed as institutional allocation behavior, typically spanning longer time horizons and carrying lower leverage. Liquidation data, on the other hand, reflects short-term wrangling in the highly leveraged derivatives market. The fact that their directions don’t match indicates that the market is currently in a structural divergence: “institutional absorption, retail leverage clearing.”

But a cautious signal is worth noting: compared with the ETF outflow scale of more than $400 million on a single day in early July, the current buyback replenishment momentum remains moderate. The return of ETF funds is not yet sufficient to constitute the necessary conditions for a trend reversal, and instead mainly reflects technical rebound buying after prior overselling.

How does “US stocks → crypto” risk transmission work?

This event provides a clear “US stocks → crypto” risk transmission example, and the transmission chain can be broken down into four layers:

First layer: macro sentiment transmission. The sharp drop in the US tech sector worsens sentiment across risk assets. Crypto assets, as high beta assets, often face heavier sell pressure during risk-off cycles.

Second layer: liquidity transmission. When US stocks experience violent volatility, some cross-market investors may need to add margin or actively reduce risk exposure, leading them to sell various risk holdings—including crypto assets—creating cross-asset liquidity compression.

Third layer: narrative logic transmission. Chip stock selloffs are not just simple sector rotation; the market has begun to systematically question the sustainability of AI capital expenditures. This narrative shift directly impacts the valuation logic of projects in the crypto market that rely on the “AI compute demand” narrative.

Fourth layer: fragility of leverage structure amplified. The high leverage nature of the crypto market means any external shock can trigger cascading liquidations. The $332 million in liquidations is not the entirety of the one-off event, but only the first phase of the chain reaction—after large-scale liquidation, the market needs time to rebuild positioning and confidence.

How do policy variables affect current market expectations?

Besides the chip stock selloff as the immediate trigger, policy is also an important variable that cannot be ignored. On July 17 Eastern Time, the US House Financial Services Committee moved to Wall Street’s Federal Hall in New York and held an off-site hearing titled “Building the Financial Future: How the CLARITY Act Releases Innovation.”

The hearing aims to drum up support for a Senate vote on the CLARITY Act before the August recess. Senate Majority Leader John Thune has pledged to put the bill on the Senate floor for a vote before the August recess. The market focus is on the schedule for the week of July 20. However, the ethical clause deadlock around the bill has not yet been resolved, and the White House is planning to convene senior-level meetings to coordinate it.

Policy uncertainty further suppresses market risk appetite. Until the regulatory framework is clear, the willingness to enter with large directional capital is restrained—this also partly explains why Bitcoin has repeatedly failed to break through around the $65,000 area: there is not enough incremental capital to absorb the overhead trapped positions and supply pressure.

Key support levels and the path to market structure repair

Technically, the $63,500–$64,000 range is the first support zone. Bitcoin is currently repeatedly testing this area. If it keeps failing, the market may retest buying strength around $63,000. Only if it can reclaim above $64,500 can the structure repair have a chance to regain continuation conditions.

Ethereum is in an even more severe situation. The $1,900 level keeps failing to be recaptured, meaning ETH currently looks more like a confirmation after a rebound rather than the start of a new trend. If it can hold in the $1,850–$1,860 zone and then launch another attack toward $1,900, the market may trade renewed “Ethereum beta repair.” Conversely, once it falls back below $1,850, short-term capital may continue to reduce exposure to high beta mainstream coins.

In the altcoin market, the Fear and Greed Index is still in the panic zone. BTC’s market cap share is about 58.38%, indicating that capital is still prioritizing mainstream assets and a limited set of mid/small-cap projects with narrative support. Overall trading volume has not expanded significantly, and most altcoin rebounds should still be regarded as trading opportunities rather than trend opportunities.

Summary

Bitcoin has dropped from $65,385 to around $62,800, with $332 million in liquidations over 24 hours and more than 85k people being liquidated. The root of this volatility is not inside the crypto market itself, but in the sharp selloff of US chip stocks. TSMC’s better-than-expected earnings report and raised capex outlook, instead, triggered deep doubts in the market about the sustainability of AI investment returns. Risk-off sentiment transmitted into crypto through three layers—macro sentiment, liquidity, and narrative logic—and ultimately ignited cascading liquidations within a highly leveraged structure.

The current market is in a choppy state of “there is support, but no breakthrough.” The divergence between ETF inflows and liquidation data, the Fear Index’s marginal improvement but still being low, and policy uncertainty together form a complex game of bulls vs. bears. With $65,000 as the key resistance level, a breakout requires stronger macro catalysts and more abundant incremental capital. Meanwhile, effective defense of the $63,000–$63,500 area is the last line of defense for longs to avoid a deeper pullback.

FAQ

Q: What is the direct trigger for this Bitcoin drop?

The direct trigger is the sharp selloff in US chip stocks. TSMC significantly raised capex guidance, which sparked concerns about the sustainability of AI investment returns. The Philadelphia Semiconductor Index plunged 4.29% in a single day, and risk-off sentiment transmitted into the crypto market.

Q: Why is the liquidation share of long positions as high as 84%?

Because encouraged by the favorable easing of inflation data, large amounts of leveraged long capital built positions around $65,000 and bet on a breakout. When price met resistance and pulled back, these leveraged long positions became the main force for forced liquidation.

Q: Where are Bitcoin’s key support and resistance levels right now?

According to Gate market data, $63,500–$64,000 is the first support zone. If it breaks down, it may test around $63,000. Above, $64,500 is the key resistance for structure repair continuation, while $65,000–$65,500 is an even more important supply-dense zone.

Q: Why did ETF inflows and liquidation data diverge?

ETF inflows reflect institutions’ long-term allocation behavior, while liquidation data reflects short-term wrangling in the high-leverage derivatives market. The fact that the directions don’t match indicates the market is in a structural divergence: “institutional absorption, retail leverage clearing.”

Q: What deep connection is there between AI chip stock selloffs and the crypto market?

Chip stock selloffs are not only sector rotation; they reflect the market’s systematic doubts about the sustainability of AI capital expenditures. This narrative change directly impacts the project valuation logic in crypto that relies on the “AI compute demand” narrative, forming narrative transmission from traditional tech stocks to crypto assets.