Bitcoin experienced a sharp decline on Tuesday morning following nearly a month of upward movement, causing other cryptocurrencies to suffer sympathetic cold sweats. The stock market opened poorly, with the Dow dropping by 450 points, and the cryptocurrency market is following the same trend. The flagship cryptocurrency dropped 7% in the past 24 hours, trading at $64,000 at the time of writing. Just a week ago, the cryptocurrency was above $70,000.
Other cryptocurrencies followed suit, including Ether, which fell 8.4% in the past 24 hours, hovering around $3,200. The second-largest cryptocurrency has fallen over 10% in a week. A similar trend was observed with popular favorite Dogecoin, which soared 40% on speculations of being added as a payment option on Elon Musk’s X but fell 14% in the day’s trade to $0.18 today. Crypto’s bloodbath made itself felt as the global crypto market cap fell by 6.88% to $2.46 trillion today, according to crypto tracking site CoinMarketCap.
Liquidations at Binance
One of the major causes of the recent crypto bloodbath is the significant liquidations in the past 24 hours— $213.85 million worth of liquidations, to be exact— at Binance, the largest crypto exchange.
Bitcoin ETFs outflows
Investors have been pouring money into spot Bitcoin ETFs, but yesterday, there was a net outflow of $85 million. This is mainly due to Grayscale’s Bitcoin ETF (GBTC), which has been experiencing outflows for over two weeks, causing the total Bitcoin ETFs to drown.
Since March 14, GBTC has seen $15 billion in outflows, limiting the total net inflow of spot Bitcoin ETFs to $12 billion, according to Bitcoin ETF tracker Farside. This could have been much higher if GBTC had seen an inflow.
The SEC’s approval of spot Bitcoin ETFs was the main cause behind the rise of Bitcoin this year. Now that spot Bitcoin is struggling, it is likely to have a negative impact on Bitcoin and the entire cryptocurrency market.
Bitcoin halving volatility
Usually, Bitcoin rides a rollercoaster of peaks and valleys after hitting record highs. The upcoming Bitcoin halving event, which will reduce the reward for mining new Bitcoin by half around mid-April, is also responsible for market volatility. In other words, we can expect more uncertainty in coming days.
Previous halving events have sent Bitcoin prices higher. The most recent halving event took place on May 11, 2020, resulting in a block reward of 6.25 Bitcoin. This year’s halving will reduce the reward to 3.125 Bitcoin for miners.
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