Today, Bitcoin’s price fell nearly 6%, forming a large red candle on the daily chart. This drop has pushed the entire crypto market into a bearish trend as the week ends. Bitcoin is currently trading around $61,592, having briefly dipped to $60,433 before a small intraday rise.
This decline has led to significant drops across the market: Ethereum has fallen below $3,000, meme coins are crashing, and there’s been a wave of liquidations. Over the past 48 hours, nearly $500 million in long positions have been wiped out. As bearish sentiment grows, let’s explore why the crypto market is experiencing this downturn.
Market Shift: From Bullish to Bearish After FOMC Meeting
Before the recent FOMC meeting, the crypto market saw a recovery rally, driven by positive sentiment from July’s CPI data. This optimism was further bolstered by the interest expressed by three major US pension funds in purchasing Bitcoin through ETFs.
However, the anticipated interest rate cut did not materialize during the FOMC meeting, with the next potential decision scheduled for September. This delay in expected monetary policy changes led to a quick shift in market sentiment, turning the previously bullish trend into a bearish downturn.
Crypto Market Hit by Major Outflows and Sell-Off Pressures
On August 2nd, following the FOMC meeting, the crypto market saw a significant bearish shift. The total net daily inflow for all U.S. Spot Bitcoin ETFs turned negative, totaling -$237.45 million. Among the largest outflows were Fidelity’s FBTC fund, which saw $104.1 million leave, Ark’s ARKB with $87.68 million out, and Grayscale’s GBTC at $45.95 million.
In contrast, BlackRock’s IBIT fund on NASDAQ experienced the highest net inflow, with $42.81 million. Despite this, the overall massive outflows had a devastating impact on the market.
Earlier this week, Bitcoin’s price had soared as Mt. Gox distributed billions worth of Bitcoin to creditors. However, 40% of these funds were sent to exchanges. With $3 billion of the $9 billion due now transferred to exchanges, the resulting sell-off could exacerbate the current bearish trend in the crypto market.
Bitcoin Futures Open Interest and Market Sentiment Amidst Crash
Amid the recent market downturn, Bitcoin’s Futures Open Interest has decreased by 5.17% over the past 24 hours. The OI-weighted funding rate has also dropped significantly to 0.0085%.
Despite this, Binance data shows that top traders in the BTC/USDT pair have a Long-to-Short ratio of 1.8582. This indicates there are nearly 1.86 long positions for every short position among top traders. This could suggest that Bitcoin and the broader crypto market might rebound soon.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
Join Cryptos Headlines Community
Follow Cryptos Headlines on Google News
