The cryptocurrency market has been in turmoil over the past 24 hours, with 361,972 traders being liquidated and losing a staggering $1.17 billion. This dramatic turn of events comes on the heels of Bitcoin’s price plummeting by 7%, hitting a low of $95,500 after reaching an all-time high of $108,268. In just three days, Bitcoin has shed about 12% of its value, leaving investors reeling from the sudden downturn.
Adding to the chaos, US Bitcoin ETFs experienced record withdrawals, with investors withdrawing a whopping $672 million in a single day. This marks the largest outflow ever recorded, surpassing the previous record set in May. The trigger for this mass exodus was Bitcoin’s sharp decline to $97,000, sparking extreme fear in the crypto market.
The current state of the crypto market has been further exacerbated by concerns surrounding Trump’s policies and potential political resistance. Market analysts, including Arthur Hayes, have predicted a severe market crash following Trump’s inauguration in January, adding to the uncertainty and panic gripping investors.
The majority of the outflows from ETFs came from Fidelity’s FBTC, leading with $208.6 million, followed by Grayscale’s BTC Mini Trust at $188.6 million and Ark & 21Shares’ ARKB with $108.4 million. Grayscale’s GBTC and Bitwise’s BITB also saw significant outflows, contributing to the overall market turmoil.
The massive outflows can be attributed to the US Federal Reserve’s recent interest rate cut, which fell short of market expectations. The Fed’s decision to reduce rates by 0.25% instead of the anticipated 100 basis points sent shockwaves through the market, prompting investors to panic. Additionally, the Fed hinted at fewer cuts in 2025, signaling a delay in regulatory measures, further fueling the sell-off of assets like Bitcoin.
Despite the current turmoil, the Crypto Fear and Greed Index still indicates a “greed” level of 74, suggesting that many investors are holding onto their positions and anticipating a recovery. Analysts believe that this market reaction may be an overreaction to the Fed’s comments, and that it could be a short-term fluctuation following the Fed meeting.
Looking ahead, Bitcoin’s price is expected to continue fluctuating as global economic tensions rise and regulatory uncertainties persist. However, some ETFs like WisdomTree’s Bitcoin Fund (BTCW) have managed to attract new investments, indicating that not all investors are fleeing the market.
In conclusion, the road ahead for Bitcoin is likely to be bumpy, with potential for more outflows if the Fed maintains its current stance on rate cuts. Despite the challenges, experts suggest holding onto assets as the market is expected to recover in the near future, especially with the possibility of new ETFs entering the market.