Bitcoin and Crypto Markets Face Turbulence: Prices Dip Amid ETF Outflows and Macro Challenges

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Crypto markets experienced another day of significant volatility this Friday, with Bitcoin (BTC) momentarily dipping below the $63,000 threshold from a higher position around $67,000 just a few hours before. A slight recovery has since occurred, bringing Bitcoin’s price to approximately $64,000, marking a 3.7% decline over the last day.

This downward trend extended across the cryptocurrency market, as evidenced by the 4.4% drop in the broad CoinDesk 20 Index during the same period. The downturn was notably led by a more than 10% decrease in Solana’s token (SOL) at certain points.

The market correction phase that began over a week ago, following Bitcoin’s retreat from a new all-time high above $73,000, persists. Despite a hopeful 10% surge on Wednesday, propelled by a dovish stance from the Federal Reserve, the anticipated quick market recovery has yet to materialize. Mike Novogratz, the CEO of Galaxy Digital, remarked during a Bitcoin Investor Day panel in New York, “It will take some time before we take out that $73,000 again.”

This period of sluggish market performance coincides with a streak of net negative flows for U.S.-listed spot Bitcoin ETFs, marking four consecutive days of losses. Although most funds continue to attract new investments, the inflows have been insufficient to counteract significant withdrawals from the Grayscale Bitcoin Trust (GBTC), which saw $359 million in outflows on Thursday alone, contributing to a total of $94 million in outflows for the group. Furthermore, Fidelity’s Wise Origin Bitcoin Fund (FBTC) recorded its lowest daily inflow, according to data from BitMEX Research.

Over the week, spot ETFs have witnessed over $830 million in outflows, approaching their second negative week since a downturn in late January when BTC prices fell to $39,000.

Coinbase Institutional analysts have suggested that the spike in GBTC sell-offs might be partly attributed to Genesis offloading shares as part of its bankruptcy proceedings. They anticipate that once these sales conclude, ETF inflows might rebound, supported by favorable macroeconomic conditions and central bank policies. The Coinbase report optimistically states, “We think the macro environment remains conducive to more spot bitcoin ETF inflows following the Federal Reserve meeting on March 20. We expect the current US disinflationary trend to persist, US financial conditions to keep improving, and market conditions to be buoyed by the Fed scaling back its quantitative tightening program.”

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