The crypto market has endured a volatile 24 hours, with 361,972 traders liquidated and losses surpassing $1.17 billion. Bitcoin’s price fell by 7%, hitting a low of $95,500 after reaching a historic high of $108,268 just days earlier. This rapid 12% drop over three days has left the market rattled. Adding to the chaos, U.S. Bitcoin ETFs saw record withdrawals, with investors pulling out $672 million in a single day—surpassing the previous record of $564 million set in May.
Bitcoin’s dive below the crucial $97,000 level was the immediate trigger for the sell-off. This psychological barrier, once broken, sent waves of fear through the market. Analysts, including Arthur Hayes, suggest political factors, such as anticipated resistance to Trump’s economic policies, are fueling market instability.
Hayes has even predicted a severe market crash following Trump’s January inauguration, amplifying investor concerns.
Major ETF players bore the brunt of the outflows:
Ethereum also felt the pressure, with spot Ethereum ETFs experiencing $60.5 million in outflows, breaking an 18-day streak of inflows.
The Federal Reserve’s recent policy decisions added to the uncertainty. Investors had hoped for a full 100-basis-point rate cut but were met with a modest 0.25% reduction instead. This smaller-than-expected cut, coupled with signals of fewer rate cuts in 2025, rattled the market.
Bitcoin and other assets saw sharp declines, culminating in over $1 billion in leveraged liquidations as traders reacted to these economic developments.
However, the investor reaction is mixed. Since the indicators show a short-term haul, the Crypto Fear and Greed Index is still showing a “greed” level of 74, suggesting that many investors are holding on to their positions, and anticipating a recovery. Many analysts are claiming this is an overreaction to the Fed’s comment and this will be a short-term fluctuation that happens after every Fed meeting.
Looking ahead, Bitcoin’s price fluctuation is likely to continue, as global economic tensions are rising and regulatory issues are expected to delay. However, some ETFs, like WisdomTree’s Bitcoin Fund (BTCW), managed to attract new investments, indicating that not all investors are backing away.
In short, the road ahead for Bitcoin will not be easy and it might see more outflows if the Fed maintains its stance over rate cuts in 2025. In such a scenario experts suggest holding on to your assets as the market will recover soon as new ETFs may flood the market sooner or later.
Despite short-term volatility, analysts suggest holding assets as the market is expected to recover once new ETFs gain momentum.
Bitcoin dropped 7% after hitting a high of $108,268 due to a negative Federal Reserve rate cut and political uncertainty.
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