According to the latest information, bitcoin (BTC) has fallen further in recent hours as it recently reached a level that it has never reached since it existed. Bitcoin Spot ETFs, celebrated for notable performance since their launch, have something to do with it.
An unprecedented daily drop in bitcoin since November 2022
Bitcoin recorded its biggest daily decline on Tuesday March 19 since the collapse of FTX in November 2022. During this day, the price of the flagship crypto fell by 8%. Like every time it soars or falls, bitcoin’s trends are no coincidence.
According to analysts, this plunge in the flagship crypto is linked to significant outflows from Bitcoin ETFs recorded on Tuesday. In this regard, we note a net withdrawal of 326 million at the end of Tuesday.
However, the day before, the Grayscale ETF had recorded a massive outflow of $643 million. For analysts, it is these massive outflows of funds from spot Bitcoin ETFs that explain the severe correction that bitcoin has experienced in recent days.
But other factors are also mentioned to explain this trend. Trader and economist Alex Kruger, for his part, discusses excessive leverage, the influence of the performance of ether on the crypto market and the frenzy around the altcoin Solana.
A crypto market generally under pressure
It seems that since the beginning of the month, the crypto market has been showing signs of running out of steam. Precisely because in an effort to maintain their bullish positions on perpetual futures contracts, traders paid exorbitant annualized funding rates.
Such unbalanced leverage is often a prelude to periods of market correction and bitcoin is no exception. Now, investors are focused on the Federal Reserve’s interest rate decision scheduled for Wednesday.
For Greg Magadini, director of derivatives at Amberdata, the Fed could lower interest rates in a context of a strong economy and higher-than-expected inflation. As a reminder, the attractiveness of risky assets, including cryptos, has declined.
The cause is the rise in the dollar index and US Treasury yields, due to persistent inflation in consumer and producer prices. This macroeconomic context highlights the need for bitcoin investors to closely monitor central bank policies and inflation indicators.
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