The cryptocurrency market, led by Bitcoin (BTC), faced significant volatility as reported by Fortune Magazine, with Bitcoin experiencing a sharp 14% drop from its all-time high (ATH) of $73,700 to around $62,483. The downturn, which occurred last week, has had a ripple effect across the cryptocurrency landscape, impacting various digital currencies.
This decline in Bitcoin’s value was primarily attributed to substantial outflows from Grayscale’s Bitcoin Trust (GBTC). Grayscale saw record outflows exceeding $640 million, while other spot Bitcoin Exchange-Traded Funds (ETFs) experienced inflows of less than $500 million. This resulted in a net outflow of $15 million on Monday alone, as per insights from Bloomberg ETF expert James Seyffart.
The market’s cautious sentiment was further influenced by the Federal Open Market Committee (FOMC) meeting in the United States. Investors have been closely monitoring potential shifts in interest rates, particularly in light of recent US inflation data, including the Consumer Price Index (CPI) and Producer Price Index (PPI). These indicators have tempered expectations for interest rate cuts.
Fortune highlighted that the CME FedWatch Tool showed a 99% likelihood of interest rates remaining unchanged, adding to the market’s cautious trading atmosphere. Investors awaited the Federal Reserve’s commentary on monetary policy, which played a significant role in the prevailing cautiousness.
In a related development, the Bank of Japan raised its key interest rate for the first time in 17 years, moving from -0.1% to a range of 0% to 0.1%, in response to rising consumer prices.
The drop in Bitcoin’s value also affected other cryptocurrencies, with major altcoins like Ethereum (ETH) and Solana (SOL) seeing declines of 8.1% and 12.5%, respectively, over the past 24 hours. Meme coins such as Floki Inu (FLOKI), Bonk Inu (Bonk), and Dogecoin (DOGE) also witnessed notable losses of 34%, 28.5%, and 24.8%, respectively, over the past week.
The overall downturn in the cryptocurrency market led to over $440 million in liquidations for crypto futures traders, particularly impacting those with leveraged positions anticipating higher prices. The bulk of these liquidations occurred on exchanges like Binance and OKX.
Despite the recent price correction, Bitcoin still maintains significant gains, with over 26% and 132% increases in the past thirty days and year-to-date, respectively.
As the cryptocurrency market continues to navigate through these fluctuations, this episode underscores the dynamic and often unpredictable nature of digital asset investments.
