Bitcoin‘s value took a significant hit, plunging by over 8% within a single day, marking the steepest fall the digital currency has seen since November of the previous year. This drastic turn came after the cryptocurrency touched record-breaking highs just a week prior, crossing the $73,500 threshold. The recent drop saw Bitcoin’s price dip below $62,000, shedding 15% of its value from its peak, as evidenced by data derived from the FTX exchange.
US ETF Withdrawals Spark Sell-Off
The decline in Bitcoin’s market price can be attributed to a host of contributing factors, notably the substantial withdrawals from Bitcoin spot ETFs in the United States. Reports from Farside, an investment firm, revealed a record $326 million exodus from these funds on March 19th. Additionally, the Grayscale Bitcoin spot ETF experienced a historic single-day outflow of $643 million on March 18th, further amplifying the downward trend in Bitcoin’s valuation.
Trader and economist Alex Kruger offers multiple explanations for the downturn, including the rampant use of leverage in trading, slumps in Ethereum‘s value, and the speculative fervor over alternative cryptocurrencies like Solana. Kruger emphasizes the role of leverage in magnifying price movements and points to Ethereum’s performance as a barometer for market sentiment.
Anticipating Federal Reserve’s Impact on Crypto
The market awaits the Federal Reserve’s forthcoming decision on interest rates, which, along with Fed Chairman Jerome Powell’s subsequent commentary, is expected to shed light on the central bank’s approach to inflation and interest rate policies. Greg Magadini from Amberdata suggests that how the Fed addresses the robust economy and inflation rates exceeding projections will have considerable influence on the sentiment toward volatile assets like cryptocurrencies.
Amid anticipations of the Fed’s statements leaning towards a more aggressive stance, the cryptocurrency community is preparing for the potential repercussions on digital asset prices. With inflation indicators surpassing forecasts and the strengthening of the U.S. dollar index and Treasury yields, the market is bracing for Powell’s address and its implications for the crypto sector.
