As U.S.-listed spot exchange-traded funds (ETFs) lost favor, the price of Bitcoin, the first decentralized cryptocurrencycurrency, fell 8% to below $61,000 on Tuesday, according to CoinMarketCap data.
This is the largest percentage decline in a single day since November 9, 2022, when the FTX market’s insolvency led prices to fall by more than 14%.
This correction was prompted by a number of factors, including substantial withdrawals from spot ETFs, with Grayscale’s ETF experiencing a record net outflow of $326 million on Tuesday and $643 million on Monday.
Alex Kruger, a trader and economist, listed the key contributing elements to the crisis. These issues included negative inflows into Bitcoin ETFs, excessive leverage, Ethereum’s market dominance, and the Solana token mania.
Following the Dencun upgrade, ether, the second-largest cryptocurrencycurrency, rose beyond $4,000 but has since fallen to $3,130, owing to decreased expectations for a US SEC-approved ether spot ETF by May.
Earlier this month, the market appeared overheated, with investors paying high funding rates for confident futures bets, foreshadowing a likely decline.
Amid rising dollar index and US Treasury yields, which may limit the appeal of risk assets, investors are looking to the Federal Reserve’s rate decision and Jerome Powell’s press conference for indications about future economic policies that could harm cryptocurrencycurrencies.
A number of factors, including ETF withdrawals, excessive leverage, and market overheating, have led to the decrease in the price of Bitcoin, highlighting the importance of caution in light of the unpredictability of economic policies and regulatory changes.
