Bitcoin (btc) The price correction accelerated on Tuesday as US-listed exchange-traded funds (ETFs) declined in popularity.
The leading cryptocurrency by market cap fell more than 8% to below $62,000, according to data from the charting platform. View TradingView. This is the largest single-day percentage drop (UTC) since November 9, 2022. On that day, prices fell more than 14% as Sam Bankman Fried's FTX exchange, previously the third-largest exchange, went bankrupt. The daily performance reported here represents the percentage gain or loss in one day, starting at midnight UTC and ending at 23:59:59 UTC.
Prices fell by 15% from their record highs of more than $73,500, which they reached last week. The CoinDesk 20 index fell 16% during the same time frame.
The recent decline in Bitcoin prices has been stimulated by several factors, including outflows from spot ETFs, according to trader and economist Alex Krueger.
Provisional data published by investment firm Farside shows that on Tuesday, there was a net outflow of $326 million from spot ETFs, the largest ever. On Monday, the Grayscale ETF saw a record outflow of $643 million.
“Reasons for the crash, in order of importance: #1 Too much leverage (funding is important). #2 ETH leads the market south (the market has decided the ETF will not pass). #3 Negative Bitcoin ETF flows (carefully, data is T+ 1). #4 Solana’s obsession with shitcoins (it has gone further)” Krueger said at X.
ether (ether), the second-largest cryptocurrency by market cap, peaked at around $4,000 after Dencun's upgrade last week, and has since fallen to $3,130. One reason for this decline was the diminishing likelihood that the US Securities and Exchange Commission would greenlight an Ethereum ETF by May.
Furthermore, the cryptocurrency market looked overheated early this month, with long-term traders paying over 100% annual financing to keep their perpetual bullish futures bets open. Such a one-sided build-up of leverage on the upside often heralds price corrections.
Investors will now closely watch the Fed's interest rate decision on Wednesday, which will be followed by Chairman Jerome Powell's press conference.
“Next week, we will have a Fed rate decision followed by Powell's press conference. This will give us more insight into whether the Fed still sees rate cuts on the horizon this year. “This will give us more insight into whether the Fed still sees rate cuts on the horizon this year,” said Greg Magaddini, Derivatives Director at Amperdata. The strong economy and higher-than-expected inflation remain reasons why the Fed remains hawkish without much of a pullback.
The dollar index and US Treasury yields have risen recently on the back of flat consumer and producer price indexes, weakening the appeal of risk assets, including emerging technologies such as cryptocurrencies.
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