Bitcoin experienced its most significant single-day loss since the collapse of FTX on Tuesday, with record outflows observed in spot BTC ETFs according to provisional data from Farside.
The price correction of Bitcoin accelerated on Tuesday as U.S.-listed spot exchange-traded funds (ETFs) saw a decline in popularity. The leading cryptocurrency’s value dropped by over 8% to below $62,000, marking its largest one-day percentage decline since November 9, 2022, when prices plummeted over 14% following the bankruptcy of Sam Bankman Fried’s FTX exchange.
It’s important to note that the daily performance mentioned refers to the percentage gain or loss within a day, starting at midnight UTC and ending at 23:59:59 UTC.
Bitcoin has retreated by 15% from its record highs of over $73,500 reached last week, while the CoinDesk 20 Index has declined by 16% over the same period.
Several factors have contributed to Bitcoin’s recent price slide, including outflows from spot ETFs, as highlighted by trader and economist Alex Kruger. Provisional data released by investment firm Farside indicates a net outflow of $326 million from spot ETFs on Tuesday, the largest on record. Grayscale’s ETF also experienced a record outflow of $643 million on Monday.
Kruger identified the main reasons for the crash, ranking them in order of importance: excessive leverage, Ethereum’s influence on the market, negative Bitcoin ETF inflows, and excessive speculation around Solana.
Ether (ETH), the second-largest cryptocurrency by market value, surged to around $4,000 following last week’s Dencun upgrade but has since fallen to $3,130. One contributing factor to this decline is the diminishing likelihood of the U.S. SEC approving an ether spot ETF by May.
Additionally, the crypto market appeared overheated earlier this month, with long traders paying annualized funding rates of over 100% to maintain their bullish perpetual futures bets. Such one-sided leverage often precedes price corrections.
Investors are eagerly awaiting Wednesday’s Federal Reserve rate decision, which will be followed by Chairman Jerome Powell’s press conference. This event will provide further insights into whether the Fed anticipates rate cuts this year, considering the robust economy and higher-than-expected inflation, which continue to support a hawkish stance.
Both the dollar index and U.S. Treasury yields have recently risen due to persistent consumer and producer price indices, dampening the appeal of risk assets like cryptocurrencies.
