Bitcoin Closes Daily Red Candle for First Time After FTX Crash

Bitcoin experienced its most significant single-day loss since the collapse of FTX as spot BTC ETFs saw unprecedented outflows on Tuesday, according to provisional data from Farside.

On Tuesday, BTC plummeted over 8%, marking its largest single-day percentage decline (UTC) since November 2022. The drop appears to have been sparked by the outflows from ETFs.

The correction in Bitcoin’s price accelerated as U.S.-listed spot ETFs lost favor. The cryptocurrency’s value dipped below $62,000, as reported by TradingView, representing a substantial decline. This drop is reminiscent of November 9, 2022, when prices tumbled over 14% due to the bankruptcy of Sam Bankman Fried’s FTX exchange. The daily performance mentioned here reflects the percentage gain or loss within a day, from midnight UTC to 23:59:59 UTC.

Bitcoin has retraced 15% from its recent peak of over $73,500 reached last week, while the CoinDesk 20 Index has similarly pulled back by 16% during the same period.

Several factors, including outflows from spot ETFs, have contributed to Bitcoin’s recent price slide, according to trader and economist Alex Kruger. Data from Farside indicates a net outflow of $326 million from spot ETFs on Tuesday, the largest on record. Kruger suggests that excessive leverage, Ethereum’s influence on the market downturn, negative BTC ETF inflows, and a speculative frenzy around Solana have all played a role.

Ether (ETH), the second-largest cryptocurrency, surged to around $4,000 following last week’s Dencun upgrade but has since declined to $3,130. One reason for this decline is the diminishing likelihood of the U.S. SEC approving an ether spot ETF by May.

Additionally, earlier this month, the crypto market appeared overheated, with long traders paying annualized funding rates exceeding 100% to maintain their bullish perpetual futures positions. Such lopsided leverage often precedes corrective price movements.