The cryptocurrency market witnessed a significant washout on May 1, 2024, as Bitcoin (BTC) prices plummeted below the $60,000 support level, reaching a two-month low.
The world’s largest cryptocurrency by market capitalization fell as low as $57,082 on the Bitstamp exchange, marking its lowest level since late February.
TLDR
- Bitcoin prices dropped below $60,000, hitting a two-month low on May 1, 2024.
- The price decline triggered over $160 million in Bitcoin liquidations within 24 hours.
- Bitcoin experienced its worst monthly performance in April since late 2022, with a nearly 16% drop.
- The recent downtrend is attributed to profit-taking by investors who entered the market during previous downturns.
- Outflows from U.S. spot Bitcoin ETFs reached a record $496 million this week, as investors reacted to the price decline and the Federal Reserve’s potential stance on interest rates.
The price decline triggered a wave of liquidations, with over $160 million worth of Bitcoin positions being liquidated within a 24-hour period, according to data from CoinGlass.
The total cryptocurrency liquidations across all exchanges surpassed $470 million, with Ethereum (ETH) accounting for $120 million of the total.
The recent downtrend in Bitcoin prices can be attributed to several factors. Firstly, investors who entered the market during the downturns of 2022 and 2023 have been taking profits, contributing to the selling pressure.
Investors in Bitcoin exchange-traded funds (ETFs) have been booking gains after witnessing significant price appreciation since the inception of these products in early 2024.
The broader market sentiment has been impacted by hawkish fiscal policy moves from the United States Treasury Secretary, Janet Yellen.
Her decision to pull liquidity from the market, rather than drawing down on reserves, has been interpreted as a setback for risk assets, including cryptocurrencies.
TLDR;
Yellen deciding to pull liquidity from the market, instead of drawing down on reserves to fuel liquidity higher.
Risk appetite takes a hit. https://t.co/GPg4brRBYI
— ted (@tedtalksmacro) May 1, 2024
April proved to be a challenging month for Bitcoin, with the cryptocurrency posting its worst monthly performance since late 2022. Bitcoin’s value declined by nearly 16% in April, erasing a significant portion of the gains accumulated during the first quarter of 2024.
The recent price correction has also led to a record outflow from U.S. spot Bitcoin ETFs. According to data from LSEG, outflows from the 10 largest U.S. spot Bitcoin ETFs have reached $496 million this week, primarily due to a slowdown in inflows into BlackRock’s iShares Bitcoin Trust (IBIT.O), the largest ETF in terms of holdings.
Analysts attribute this outflow to investors’ reactions to the price decline and the Federal Reserve’s potential stance on interest rates.
While the Fed is not expected to make any changes to interest rates at its upcoming meeting, the view that the central bank may not cut rates at all this year has gained traction among investors, potentially delivering a blow to interest rate-sensitive assets like cryptocurrencies.
Despite the recent correction, Bitcoin remains up 35% so far this year and double where it was this time last year. This resilience can be attributed to the billions of dollars flowing into newly minted Bitcoin ETFs since January, which have provided mainstream investors with exposure to the cryptocurrency market.
