Despite continuous inflows into the largest US-based Bitcoin exchange-traded funds (ETFs) for nearly 20 consecutive days, Bitcoin’s price took a surprising downturn on Friday, shedding over $3,000 in just a few hours.
Renowned analyst Willy Woo suggested that excessive leverage within the system might be hindering Bitcoin’s positive developments. This sentiment has been echoed across various cryptocurrency platforms.
Another prevalent theory revolves around profit-taking. Bitcoin’s proximity to its all-time high of $73,800 meant that most investors were sitting on profitable positions, prompting some to cash out their gains.
Regardless of the underlying reason, Bitcoin’s sudden drop triggered over $400 million in liquidations within a single day, serving as a cautionary reminder for traders to remain vigilant amid potential market swings in either direction.
Major financial institutions like BlackRock and Fidelity stepping into cryptocurrency-backed ETFs signaled a notable shift in the investment landscape. Retail and institutional investors alike now have easier access to Bitcoin’s performance without the complexities of managing cryptographic keys and passwords.
The immediate impact was evident as Bitcoin’s price surged by over 50% in the weeks following the ETFs’ launch, reaching a new all-time high of $73,800 approximately two months later, marking a historical first ahead of a halving event.