#What is Driving Bitcoin's Recent Decline?
Bitcoin has experienced a significant downturn, falling to $67,000 and dipping below its previous all-time high of $69,000 set in 2021. This sharp decline has not only erased the gains made since the market's low in November 2022 but also signals a troubling trend for the entire cryptocurrency market.
How Did Other Cryptocurrencies Fare?
Ethereum has also seen a decline, dropping below the $2,000 mark. Similarly, Solana is down to $84, and XRP has sunk to $1.29. Overall, the total cryptocurrency market cap has seen a reduction of over 7% within the past 24 hours, now resting at approximately $2.3 trillion.
What Caused the Mass Liquidation?
The selloff was exacerbated by heavy leverage within the market. Recent data from Coinglass indicates that liquidations amounted to $480 million within the last hour and exceeded $1.4 billion over the past day. This level of forced selling may continue as market sentiment shifts.
Impact on Spot ETFs
The situation worsens for Bitcoin funds, with over $800 million in net outflows from Bitcoin ETFs recorded over two days. Additionally, Ethereum ETFs saw $68 million in outflows this week, according to SoSoValue data, indicating growing investor hesitation.
What Does This Mean for Large Holdings?
Strategy, which is the largest corporate Bitcoin holder with over 713,000 BTC, now faces a paper loss exceeding $6.7 billion. This prompted a 13% drop in its share price on Thursday, bringing it close to $112, a level not seen since August 2024. The company is due to announce earnings later today, a release that may further impact its stock performance.
In the same realm, BitMine, noted as the leading corporate Ethereum holder, is looking at a staggering $8 billion in unrealized losses on its Ethereum assets.
Is This a Broader Market Correction?
The risks and adjustments are not limited to cryptocurrencies. Traditional markets are also feeling the heat, with the S&P 500 declining by 1.2% and the Nasdaq by 1.8%. Precious metals like silver and gold have also dropped sharply, with silver down 15% and gold down 5%, marking an unusual overnight market movement.
The losses we are witnessing this week reflect one of the sharpest cross-asset corrections observed since late 2022. This trend suggests a heightened aversion to risk across various asset classes, making it crucial for investors to reassess their strategies moving forward.