Bitcoin, after enjoying a commendable rally throughout the year, encountered its most significant single-day decline since the infamous crash of the FTX Exchange in November 2022. The sharp drop has sent waves of concern and speculation through the crypto community and investors alike.
Sudden Plunge
On a tumultuous Tuesday, Bitcoin witnessed a staggering 9% fall, plummeting from $68,000 to $61,900. This dramatic decrease was influenced by multiple factors converging to exert downward pressure on the cryptocurrency's value.
Key Factors Behind the Drop
- High Leverage in Cryptocurrency Markets: The excessive leverage within the cryptocurrency markets has been pinpointed as a pivotal reason behind Bitcoin’s poor performance.
- Paused Ethereum Spot ETF Approval: The SEC's decision to halt the approval process of an Ethereum Spot ETF has added to the uncertainty and more negative sentiment around cryptocurrencies.
- Profit-taking Taking Among Investors: Investors choosing to cash in on their gains contributed further to this week’s downward trajectory.
Weekly Impact and ETF Responses
Over the week, Bitcoin's value eventually depreciated by about 5.5%, despite a brief recovery on Wednesday. However, the rebound was short-lived, as the largest cryptocurrency resumed its decline for the remainder of the week. It was fluctuating around $65-66k at the very end of the week.
The Purpose Bitcoin ETF (TSX:BTCC.B) was not spared from the turmoil, recording a 6.69% loss. Similarly, the CI Galaxy Bitcoin ETF (TSX:BTCXb) (BTCX.B) suffered as well, losing 6.63%.
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