Bitcoin just recently hit a new all-time high of $73,737 but the leading crypto asset has since experienced a massive price correction that has resulted in the whole market tumbling down.
On Tuesday, the world’s largest cryptocurrency by market cap slipped under $63,000, causing a market-wide turmoil that saw its overall capitalization drop by 8% in the last 24 hours.
The altcoin market, which closely follows Bitcoin’s price movements, has also seen a slowdown in momentum as the recent bull run ahead of Bitcoin’s halving is showing signs of cooling down.
Bitcoin Falls Below $63,000, resulting in the Crypto Sector Losing 8% Market Cap
This move to the downside came despite the excitement surrounding the approval of Bitcoin- exchange-traded funds (ETFs) and the market’s growing interest in the Solana ecosystem.
According to data from CoinShares, last week saw a record $2.9 billion flowing into the spot Bitcoin ETFs, with a vast majority of this capital going to BlackRock’s iShares Bitcoin Trust (IBIT). The fund issued by the world’s largest asset manager received $2.4 billion in inflows during that period.
However, the crypto market started to lose out on Tuesday, a day after the Grayscale Bitcoin Trust (GBTC) ETF experienced large outflows, and other ETFs recorded lower-than-usual inflows. The Bitcoin ETF market closed on Monday with a net outflow of $154 million.
Meanwhile, investors pulled out $14 million worth of funds from Ethereum (ETH) on the back of the blockchain successfully initiating the Duncun hard fork, which is expected to reduce gas fees and make the network more scalable. Solana (SOL) and Polygon (MATIC) also saw major outflows this week.
One BitMEX User Flash Sold 400 BTC, Causing Bitcoin Price to Crash to $8,900
An incident that played a major part in the crumbling of Bitcoin and the overall crypto market occurred on the BitMEX exchange. On Tuesday, an unknown entity sold over 400 BTC, worth approximately $24.5 million at current prices, in quick succession to momentarily bring Bitcoin’s price down to $8,900.
BitMEX launched an internal investigation in the aftermath to find out what caused it and has temporarily disabled withdrawals for a few user accounts as part of the inquiry.
The incident also brought into question the potential impact large-scale ETFs will have on Bitcoin. Former CEO of BitMEX, Arthur Hayes, had previously warned in an article that overtly successful spot Bitcoin ETFs could “destroy” the apex cryptocurrency.
He argued that if ETF issuers held a significant portion of Bitcoin’s total supply, then it could negatively affect the number of transactions on its blockchain, resulting in miners’ reward for validating transactions being reduced.
At its worst, this scenario could lead to miners pulling themselves out of the Bitcoin network, potentially causing Bitcoin to annihilate, he opined.
Meme Coins Drop 17% with WIF and FLOKI Leading the Line
The meme token sector witnessed some of the biggest losses this week, dropping 17% on average, with Solana-based dogwifhat (WIF) and floki (FLOKI) losing 18% of their value. Interestingly, meme cryptocurrencies have had the strongest gains in this bull run, but are infamous for their extreme volatility.
As the crypto market continues to evolve and institutional interest in digital assets grows, investors need to remain cautious and monitor developments much more closely. Even though the approval of spot Bitcoin ETFs has proven to be a significant milestone, it also presents new challenges and potential risks for the industry.
The cooldown of the latest bull run and the uncertainty surrounding the large-scale Bitcoin ETFs underscores the need for investors to calm down as the market prepares itself for the upcoming block reward halving event in April to continue its bull run.
