The cryptocurrency market is currently navigating a period of uncertainty as the recent bull run shows signs of cooling down.
This comes despite the excitement surrounding the approval of a Bitcoin exchange-traded fund (ETF) and the growing interest in the Solana ecosystem.
TLDR
The crypto market is experiencing uncertainty as the recent bull run cools down, despite the approval of a Bitcoin ETF and massive interest in Solana.
A record $2.9 billion flowed into crypto funds last week, with the majority backing Bitcoin ETFs, particularly BlackRock’s iShares Bitcoin Trust.
Bitcoin’s price recently hit a new all-time high of $73,737 but has since pulled back and is now trading around $63k.
A BitMEX whale sold over 400 BTC in a short period, causing a temporary drop in Bitcoin’s spot price on the platform to around $8,900.
Former BitMEX CEO Arthur Hayes believes that overly successful spot Bitcoin ETFs could potentially “completely destroy” Bitcoin by reducing miner incentives.
Bitcoin’s price recently reached a new all-time high of $73,737 but has since experienced a pullback, now trading around $63,130.
The altcoin market, which largely follows Bitcoin’s price movements, has also seen a slowdown in momentum.
Despite the market’s unease, institutional investors continue to pour money into crypto funds at a record pace.
According to data from European fund manager CoinShares, a new record was set last week, with $2.9 billion flowing into crypto funds.
The vast majority of this capital is backing Bitcoin ETFs, particularly BlackRock’s iShares Bitcoin Trust, which received $2.4 billion in inflows.
The approval of 11 spot Bitcoin ETFs by the U.S. Securities and Exchange Commission in January has been a major catalyst for this influx of institutional investment.
However, not all crypto funds are experiencing the same level of success.
Investors pulled $14 million out of funds providing exposure to Ethereum, and funds focused on Solana and Polygon also saw outflows.
As the market grapples with uncertainty, a recent incident on the BitMEX cryptocurrency derivatives exchange has added to the unease.
An unknown entity sold over 400 BTC in a short period on the BitMEX BTC/USDT spot market, causing a momentary drop in Bitcoin’s price to around $8,900.
We are investigating unusual activity in the past few hours involving a user selling large orders on our BTC-USDT Spot Market.
This does not affect any of our derivative markets, nor the index price for our popular XBT derivatives contracts.
The trading platform is operating…
— BitMEX (@BitMEX) March 19, 2024
BitMEX has launched an internal investigation into the situation and has temporarily disabled withdrawals for a few accounts as part of the inquiry.
The exchange has assured users that its trading platform is operating normally and that all funds are safe.
This incident has reignited concerns about the potential impact of large-scale Bitcoin ETFs on the cryptocurrency’s network.
Former BitMEX CEO Arthur Hayes has previously warned that overly successful spot Bitcoin ETFs could “completely destroy” Bitcoin.
“Expression” is my last article of 2024. I offer some thoughts on expressions of the #crypto investment theme that will ultimately prove to be worthless.
May the Pump be with you!https://t.co/bG4ZnSjYu5 pic.twitter.com/nbru6yZlJD
— Arthur Hayes (@CryptoHayes) December 23, 2023
Hayes argues that if ETF issuers hold a significant portion of the total Bitcoin supply, it could negatively impact the number of transactions on the network, reducing miners’ incentives to validate transactions.
In an extreme scenario, this could lead to miners turning off their machines, potentially causing the network to die and Bitcoin to vanish.
As the crypto market continues to evolve and institutional interest grows, it is crucial for investors to remain cautious and monitor developments closely.
The approval of Bitcoin ETFs has been a significant milestone for the industry, but it also presents new challenges and potential risks.
The cooling of the recent bull run and the uncertainty surrounding large-scale Bitcoin ETFs underscore the need for a calm as we navigate the upcoming halving and continuation of the bull run.
Oliver Dale
Editor-in-Chief of Blockonomi and founder of Kooc Media, A UK-Based Online Media Company. Believer in Open-Source Software, Blockchain Technology & a Free and Fair Internet for all.
His writing has been quoted by Nasdaq, Dow Jones, Investopedia, The New Yorker, Forbes, Techcrunch & More. Contact Oliver@blockonomi.com
