Bitcoin witnessed its most significant single-day loss since the November 2022 downfall of FTX, with an over 8% drop in value, pushing its price below $62,000. This plunge, marked as the largest since the FTX exchange bankruptcy, was influenced by a notable retreat from U.S.-listed spot exchange-traded funds (ETFs).
Record ETF Outflows Fuel Bitcoin’s Price Slide
Tuesday’s market movement saw Bitcoin’s price correct sharply, influenced heavily by record outflows from spot ETFs. According to provisional data from Farside, there was a staggering net outflow of $326 million from these ETFs, marking a record high. This followed another significant outflow from Grayscale’s ETF, which saw $643 million exit the day before. These outflows likely played a crucial role in Bitcoin’s price dynamics.
Factors Behind the Market Correction
Several factors contributed to Bitcoin’s recent price downturn. Alex Kruger, a trader and economist, highlighted excessive leverage in the market, with annualized funding rates for bullish bets surging over 100%, indicating an overheated market ready for a correction. Moreover, anticipation around the U.S. SEC’s decision on an ether spot ETF and its subsequent dwindling likelihood added to the market’s downward pressure. Ether, too, saw a decline after its recent peak, influenced by market speculations and the recent Dencun upgrade.
Future Market Outlook
Investors are now turning their attention to the upcoming Federal Reserve rate decision and Chairman Jerome Powell’s press conference. The decision will provide further insights into the Fed’s stance on rate cuts amid a robust economy and rising inflation. The recent increase in the dollar index and U.S. Treasury yields, reflecting persistent inflation, has also impacted the attractiveness of risk assets like cryptocurrencies.
