Bitcoin has dropped 8% since Sunday night as demand for spot exchange-traded funds has cooled and hopes dwindle that the Federal Reserve will cut interest rates soon.
Starting its descent from $71,229, the original cryptocurrency was hovering around $65,761 as of 11:40 a.m. EST, according to CoinGecko data.
So-called memecoins also sank, with Pepe and Dogecoin falling 8%, and Shiba Inu by 11%, in the past 24 hours, according to CoinGecko data.
One contributor to the slump is dampened interest in the nine spot Bitcoin ETFs that began trading on Jan 11. On Monday, the funds saw a net outflow of $85.8 million, the first since March 22, according to BitMEX data.
Daily trading volume has dropped to $5.4 billion, 43% less than its peak of $9.5 billion recorded in the first week of March, with continuous outflows from Grayscale’s GBTC putting significant selling pressure on Bitcoin prices over the past three weeks. On Monday, GBTC saw nearly $303 million of outflows, taking the total to about $15 billion since trading began, according to BitMEX.
GBTC Outflows of 4.4K #BTC Today
— Thomas | heyapollo.com (@thomas_fahrer) April 1, 2024
Total GBTC Outflows of 290K Since ETF launch
Will be updating our ETF Tracker with the new 9 ETF flows as it comes available. pic.twitter.com/pX0BINeJpQ
In the fourth quarter of 2023, prices were bolstered by optimism that the Securities and Exchange Commission would approve the ETFs, and in the first quarter of this year, the trading of the products has stimulated growth, Matteo Greco, a research analyst at Fineqia International, told Fortune.
“In the last couple of weeks, there’s been the first slowing down in pace of inflow,” he added.
The recent slump and the decelerating ETF interest is also in anticipation of tight Federal Reserve activity, as data from the CME group suggests a 95% likelihood that the Fed will maintain target rates at its May meeting.
“The changed views about the Fed are having an impact across crypto, where there has been a selloff as the week gets underway,” trader Stefan von Haenisch told CNBC on Tuesday.
But Greco thinks there’s a third factor at play: a “pretty typical” price correction while approaching the April 20 halving.
“Bitcoin price tends to surge, have a correction approaching the halving, and continue surging in the months following the event,” Greco said. “What’s happening now is in common with past cycles.”
