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Amid a broader reset of market expectations for interest rate cuts by the Federal Reserve (Fed) by 2025, investors on Thursday withdrew a record $680 million from bitcoin ETFs, the largest departure in a single day since their approval in January. investment funds.
Grayscale and Bitwise bitcoin ETFs See 8% Decline
When bitcoin ETFs faced this outflow, the price fell another 5% to trade around $97,400 to close the week. The sell-off aligns with a general slowdown in risk assets, triggered by the Federal Reserve's decision. updated economic projections released earlier this week.
The US central bank now forecasts just two quarter-point rate cuts over the next year, a significant reduction from the four cuts previously forecast at its September meeting.
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Notable bitcoin ETFs, including Grayscale's bitcoin Trust and Bitwise's bitcoin ETF, have seen declines of about 8% since the Federal Reserve's new guidance, while bitcoin itself has lost about 9% in the same period.
In particular, Thursday's capital outflows broke a streak of <a target="_blank" href="https://x.com/HODL15Capital/status/1869714512707985762″ target=”_blank” rel=”nofollow”>15 consecutive days of tickets for the twelve US bitcoin ETFs, for a net inflow of approximately $5.3 billion over this period.
After reaching an all-time high of just over $108,000 earlier this week, the market's top cryptocurrency fell below the $100,000 level on Thursday. Before the recent recovery, which is around $100,000, it fell to $92,000.
While the bearish sentiment In the markets it can be attributed to the cautious stance of the Federal Reserve, but is also likely to be influenced by seasonal profit taking among institutional investors in bitcoin ETFs.
Analysts Warn of Continued Cryptocurrency Sell-Off
The recent selling pressure could further impact market sentiment as <a target="_blank" href="https://finance.yahoo.com/news/bitcoin-etfs-see-record-outflows-151407928.html?guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAIFyWr-kt-LWPvyO1a1zvECLSF9mIfEl0jsIFvqIPwRSpNCV4H4YgCS2JJvCT_Z_FbU_ForDlmpXoek1l2bU6jzSxLzLOQf3v1JDIE1KiGKofxpGRJH0pEUouC1IDGQyT4yG4XoPK3pJdweSr0Lph0SkodB66GhVl3gzhZPoTpFW&_guc_consent_skip=1734751929″ target=”_blank” rel=”nofollow”>noted by Joseph Dahrieh, CEO of Tickmill.
“This drop could weigh heavily on the cryptocurrency and overall market sentiment, particularly as bitcoin fell below the $100,000 mark, indicating potential short-term volatility and downside risks,” he commented.
Volatility has been exacerbated by huge liquidations in long and short positions, totaling more than $240 million in a 24-hour period. Antonio Di Giacomo, senior market analyst at XS.com, commented: “The Fed's cautious stance in signaling fewer cuts for 2025 created an atmosphere of doubt and speculation.”
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Looking ahead, the sell-off in the cryptocurrency market may persist in the short term. Alex Kuptsikevich, chief market analyst at FxPro, speculated that the total market capitalization of cryptocurrencies could fall below $3 trillion, down from a high of $3.7 trillion earlier this month.
He warned that “a failure below $94,500 would indicate a breakout of the bullish trend of the last six weeks, while a drop below $92,000 would put the price below the 50-day moving average. In this case, time is on the side of the bears.”
At the time of writing, bitcoin has managed to stabilize above $97,400 as the week comes to a close, despite posting 4% losses in the previous 24 hours.
Featured image of DALL-E, chart from TradingView.com
