Bitcoin experienced a significant crash as the price fell below $66,000, dragging the rest of the crypto market down as well. The root cause of this crash can be linked back to Spot Bitcoin ETFs. These ETFs, which had been driving the bull run, started to show signs of weakening as institutions scaled back on their buying. Data from Spot On Chain revealed a drastic drop in net flows into these ETFs over the past few days. The decrease in inflows was first noticed on Wednesday, March 3, with a 38% decline in daily net inflows, following a high on the previous day. The trend continued on Thursday, March 14, as net inflows registered another massive crash, falling 80.6% compared to the prior day.
While the Spot Bitcoin ETFs are still experiencing positive inflows, the rise in outflows could have a detrimental effect on Bitcoin’s price. The recent flash crash led to Bitcoin struggling to recover, with the price hovering around $66,500. Despite a brief uptick, the resistance levels at $68,000 and $68,700 pose significant challenges for the price to overcome. The crash resulted in an 8% decline in Bitcoin’s price within a day, reducing its market cap to $1.33 billion. This downturn also affected altcoins like Ethereum, Dogecoin, and Cardano, which saw an average decline of 10%.
The quick buy-up of the dip following the flash crash indicates strong demand for Bitcoin at lower prices. However, the mounting resistance levels could impede any significant price recovery in the short term. The overall market sentiment remains cautious as investors wait to see how the situation with Spot Bitcoin ETFs unfolds. The recent market volatility serves as a reminder of the risks associated with investing in cryptocurrencies.
It is essential to note that the information provided in this article is for educational purposes only. The opinions expressed here do not reflect the views of any specific entity or individual. Investing in cryptocurrencies carries inherent risks, and it is advisable to conduct thorough research before making any investment decisions. Readers are encouraged to use the information provided here responsibly and at their own discretion.
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