Bitcoin wobbles: Worst day for crypto since FTX crash

According to recent reports, Bitcoin (BTC) has dropped again in the past few hours, having recently hit a level it has not reached since its inception. The Bitcoin Spot ETFs, celebrated for their significant performance since launch, have played a part in this.

An unprecedented daily drop in Bitcoin since November 2022

Bitcoin recorded its biggest daily drop since the collapse of FTX in November 2022 on Tuesday, March 19. On this day, the price of the leading cryptocurrency decreased by 8%. As with all times when it soars or falls, Bitcoin’s trends are not by chance.

According to analysts, this plunge of the leading crypto is related to significant outflows from Bitcoin ETFs recorded on Tuesday. Regarding this, there was a net withdrawal of 326 million by the end of that Tuesday.

The day before, the Grayscale ETF had recorded a massive outflow of 643 million dollars. Analysts believe these massive outflows from spot Bitcoin ETFs explain the severe correction Bitcoin has been experiencing over the past few days.

However, other factors are also mentioned to explain this trend. The trader and economist Alex Kruger, for his part, points out excessive leverage, the influence of Ether’s performance on the crypto market, and the frenzy around the altcoin Solana.

Bitcoin registers biggest single-day loss since FTX's collapse.#Bitcoin has crashed around $7000 in the last 24 hours and it is down by $12,000 from it's All-time high! 🤔 pic.twitter.com/YWECQES2cv

— Sumit Kapoor (@moneygurusumit) March 20, 2024

A crypto market under overall pressure

Since the beginning of the month, the crypto market appears to be showing signs of fatigue. Precisely because traders have been paying exorbitant annualized financing rates to maintain their bullish positions on perpetual futures contracts.

Such an unbalanced leverage is often a prelude to periods of correction in the market, and Bitcoin is no exception. Now, investors are looking towards the Federal Reserve’s interest rate decision scheduled for this Wednesday.

According to Greg Magadini, Chief Product Officer at Amberdata, the Fed could lower interest rates in a context of a strong economy and higher-than-expected inflation. As a reminder, the appeal for risk assets, including cryptos, has fallen.

This is due to the rise in the US dollar index and Treasury yields, driven by 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.