Bitcoin’s decline is undoing weeks of gains. At the same time, the total market capitalization of the crypto market is facing its biggest drop since the spot BTC ETF approval was certified as a sell-off news.
Will the bulls come to the rescue, or will they continue to go downside?
ETF outflows from the Grayscale Bitcoin Trust (GBTC) accelerated, reaching $642.5 million yesterday, surpassing the record of $640.5 million set on January 22, resulting in a net outflow of $154.4 billion from Bitcoin spot ETFs with a market capitalization.
Yesterday’s performance saw GBTC experience its biggest ETF outflow since the stock market hit a low after the global financial crisis in March 2009. For now, Grayscale hopes to reverse this bad impression by promising to gradually reduce the exorbitant fees.
The selling pressure from ETF outflows was reflected in crypto prices yesterday, with Bitcoin falling nearly 9% from its highest to lowest after the U.S. stock market opened on Monday.
With falling prices comes liquidation.
A total of $635 million in leveraged trades have been liquidated in the past 24 hours, 80% of which came from longs, which has brought funding rates back to normal across the board and provided a supportive environment for traders looking for new longs.
Despite the fall in the price of bitcoin, a $1.4 trillion national pension fund in Japan (the world’s largest) announced that it is eyeing bitcoin to diversify its portfolio, which has given new hope for institutional adoption of the cryptocurrency.
The market is showing strong risk appetite, indicating that we are in a bull market. However, it should be noted that a 30% standard bullish correction will bring BTC down to $51,000, with further downside.
The Fed’s interest rate decision in recent days is likely to be a major catalyst for market volatility, as recent hot inflation data could prompt the Federal Open Market Committee (FOMC) to adopt a more hawkish policy stance than it has been in the past few months. Such a shift would delay market participants’ expectations of a rate cut and undoubtedly pour cold water on the rising risk rhetoric that has been going on since October last year.
The probability of a rate cut this month has plummeted to just 1%, in stark contrast to the 90% chance of a rate cut in March at the end of last year.