As Fortune Magazine reported, the cryptocurrency market experienced significant volatility as Bitcoin (BTC) experienced a sharp decline that had a domino effect on other cryptocurrencies. The recent drop in Bitcoin price coupled with outflows from Grayscale's GBTC has caused concern among investors.
Bitcoin experiences a 14% correction from ATH
Since hitting its all-time high (ATH) of $73,700 last week, Bitcoin suffered a 14% decline, briefly hitting $62,483 on Tuesday morning. However, it recovered and stabilized at around $64,900, just below the $65,000 mark.
The decline was attributed to record outflows of over $640 million from Grayscale's Bitcoin Trust (GBTC). In comparison, other spot Bitcoin ETFs saw inflows of less than $500 million, resulting in a net outflow of $15 million on Monday, according to Bloomberg ETF expert James Seyffart.
This GBTC outflow, coupled with the cautious sentiment surrounding the Federal Open Market Committee (FOMC) meeting in the US, had a significant impact on Bitcoin's performance.
As NewsBTC recently reported, investors were cautious ahead of the FOMC meeting and were closely monitoring the possible changes in interest rates. Recent higher-than-expected inflation data, as shown by the US Consumer Price Index (CPI) and the Producer Price Index (PPI), dampened expectations of interest rate cuts.
According to Fortune, the CME FedWatch Tool predicted a 99% chance that interest rates will remain unchanged, further influencing market sentiment. According to the report, investors were interested in assessing the Federal Reserve's stance on monetary policy, which contributed to the cautious trading environment.
In the same context, the Bank of Japan raised its key interest rate to 0.1% from -0.1% to 0% in response to rising consumer prices. This was the first tariff increase in 17 years.
Crypto futures traders are taking a hit
Bitcoin’s price drop had a cascading effect on other cryptocurrencies. Major altcoins such as Ethereum (ETH) and Solana (SOL) recorded significant declines of 8.1% and 12.5%, respectively, in the last 24 hours.
Meme coins including Floki Inu (FLOKI), Bonk Inu (Bonk), and Dogecoin (DOGE) also suffered losses of 34%, 28.5%, and 24.8%, respectively, over the past week.
The drop in cryptocurrency prices resulted in over $440 million worth of liquidations for crypto futures traders. Traders who had leveraged their positions by betting on higher prices suffered significant losses. Most of these liquidations took place on Binance, totaling $212 million, followed by OKX with $170 million.
Despite the price correction, BTC has seen significant gains of over 26% and 132% in the last thirty days and year-to-date, respectively.
Featured image from Shutterstock, chart from TradingView.com
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