The largest cryptocurrency Bitcoin (BTC) has fallen more than 7% in the last 24 hours, dropping below $42,000. This decline in the largest cryptocurrency led to sharp pullbacks in many altcoins, with liquidations in the Bitcoin market alone amounting to $338 million.
Over 101,000 Crypto Traders Liquidated
The price drop is particularly notable following the green light given by the U.S. Securities and Exchange Commission (SEC) to 11 spot Bitcoin ETFs in the U.S. With this drop, the majority of the gains Bitcoin made in the last month have been erased.
According to data provided by the crypto data platform Coinglass, over 101,000 crypto traders were liquidated in the last 24 hours, pushing them out of the market. The largest individual liquidation occurred on the cryptocurrency exchange Bybit in the BTC/USD trading pair, with a position worth $4.5 million being liquidated. The majority of the liquidations were long positions, amounting to $271 million.
Spot Bitcoin ETFs Triggered the Downturn
Bitcoin started the day trading at $46,300 on January 12th but began to decline as volatility increased with the opening of U.S. markets at 17:30, eventually dropping to $41,900.
On January 11th, spot Bitcoin ETF products, which had generated over $4.5 billion in cumulative trading volume, produced a cumulative trading volume of $3 billion on January 12th. Market observers believe that despite one of the strongest debuts in ETF history with spot Bitcoin ETFs, investors used the ETF approval as an opportunity to take profits, following the “buy the rumor, sell the news” investment strategy.
On the other hand, the 11 spot Bitcoin ETFs provided a total inflow of $700 million to the cryptocurrency market after their first day of trading. However, the situation for Bitcoin worsened on January 12th when Grayscale Investments’ spot Bitcoin ETF, GBTC, saw an outflow of $95 million. Bloomberg ETF analyst Eric Balchunas suggested that despite this recorded outflow, the situation could be much worse, with potential outflows being significantly higher.
