Why the Bitcoin price is down almost 8%

Only recently Bitcoin (BTC) soared to a new all-time high (ATH) surpassing $73,700. Despite this milestone, the cryptocurrency market is currently undergoing a substantial correction, with BTC’s price dropping to approximately $63,000 at the time of writing. This adjustment has led to a 7.6% decrease in the total market capitalization of cryptocurrencies, bringing it down to $2.27 trillion. 

Record ETF outflows

Nonetheless, Bitcoin demonstrates remarkable resilience amidst the largest outflows the Grayscale Bitcoin Trust (GBTC) has ever seen. GBTC faced an unparalleled withdrawal of funds, with a staggering $643 million exiting in a single day. This massive withdrawal introduces significant selling pressure on Bitcoin, impacting its market price negatively. Analysts attribute this exodus to the high fees associated with the trust and the increasing competition from newly launched Bitcoin exchange-traded funds (ETFs).

The introduction of Bitcoin ETFs earlier this year represented a significant evolution in the cryptocurrency investment landscape. Offering lower fee structures, these ETFs have attracted many investors away from GBTC funds. This fact is evidenced by the substantial $451.5 million inflow into the iShares Bitcoin ETF (IBIT), despite a general net outflow of $154 million from Bitcoin ETFs. 

Fed meeting stirs uncertainty

Nervousness among investors has also been heightened by the anticipation of the Federal Open Market Committee (FOMC) meeting. Investors are eagerly awaiting the Federal Reserve’s decision on monetary policy, which may shift from tight to loose in reaction to inflation rates or indications of an economic slowdown, potentially affecting the crypto market’s direction.

Moreover, a sharp decline in the prices of major cryptocurrencies has triggered extensive liquidations in the derivatives market, surpassing $182 million in a single day. With long positions constituting $140 million of this total, the sell-off further pressures asset prices downward.

Bearish technical indicators

The market’s current downturn may also represent a necessary adjustment after reaching a peak in market capitalization. Indicators of bearish divergence and an overbought condition, as shown by a significantly high daily Relative Strength Index (RSI), suggest a forthcoming deceleration in price growth due to diminishing trader demand. 


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