Bitcoin and Cryptocurrencies Plunge as $10 Trillion Bitcoin Price Bet Fails
The cryptocurrency market experienced a sharp decline as the bitcoin price dropped nearly 10% in the last 24 hours. This downward trend had a significant impact on other major cryptocurrencies such as ethereum, XRP, and solana, resulting in a combined loss of approximately $100 billion from the overall crypto market. The plunge in prices came as a surprise to many, considering the recent surge fueled by a massive $10 trillion bitcoin spot exchange-traded fund (ETF) bet. Despite the high expectations, Bitcoin and other top ten coins failed to sustain their upward momentum.
Arthur Hayes Warns of 30% Bitcoin Price Crash Triggered by Federal Reserve
Renowned bitcoin and crypto trader Arthur Hayes had previously cautioned about the potential for a 30% crash in the bitcoin price, attributing it to actions by the Federal Reserve. In a blog post, Hayes expressed his expectation of a “vicious washout” in the crypto market, specifically targeting March of this year. Hayes, who is the chief investment officer of Maelstrom family office and former CEO of BitMex, stated that he had positioned himself in the crypto market during the latter half of 2023, while considering the period until April a “no-trade zone” in terms of adding risk.
Hayes further explained that the predicted crash could be driven by a “dollar liquidity rug pull.” However, he also anticipated a swift rebound in the bitcoin price due to the Federal Reserve’s decision to resume money printing. Bitcoin, being a globally traded neutral reserve hard currency not tied to the banking system’s liabilities, is expected to recover despite the initial decline caused by broader financial market movements.
Bitcoin Price Crash Wipes $2 Trillion from Crypto Market, But Rebound Expected
In 2022, the crypto market witnessed a significant crash that wiped out a staggering $2 trillion from the combined value of bitcoin, ethereum, XRP, solana, and other cryptocurrencies. This crash was largely attributed to the Federal Reserve’s measures to combat soaring inflation, which entailed raising interest rates and reducing its balance sheet. However, industry experts and analysts are optimistic about a potential rebound. Given bitcoin’s historical resilience, it is expected to recover from any prolonged downturn. The crypto market has experienced similar corrections in the past, with bitcoin displaying remarkable resilience and emerging stronger over time.
Bitcoin ETF Approval Could Present Buying Opportunity for Long Positions
The imminent approval of spot bitcoin exchange-traded funds (ETFs) could potentially provide an opportunity for investors to buy into the crypto market at a discounted price. While the approval itself may initially trigger a “sell the news” event, experts believe any short-term pullbacks in the bitcoin price should be seen as an opportunity to add significant long positions. CK Zheng, chief investment officer at crypto hedge fund ZX Squared Capital, states that if the bitcoin price experiences material pullbacks in the near term, it could present a favorable chance for investors to accumulate more long positions.
BlackRock-led Wall Street Pushes Bitcoin Price Up as Spot ETF Nears Approval
The bitcoin price experienced a notable surge in 2023, largely driven by the efforts of BlackRock-led Wall Street to introduce a spot bitcoin ETF. As the U.S. Securities and Exchange Commission (SEC) inched closer to approving these ETFs, the price of bitcoin gained momentum. While the market anticipates a potential “sell the news” event following ETF approval, experts like Zheng believe any pullbacks to be temporary and short-lived. The involvement of prominent financial institutions in the cryptocurrency space heralds increased adoption and validation, leading to further price appreciation in the long run.
Analyst comment
1. Bitcoin and Cryptocurrencies Plunge as $10 Trillion Bitcoin Price Bet Fails – Negative news. The market is likely to experience a short-term decline as investor confidence is shaken, but could recover over time.
2. Arthur Hayes Warns of 30% Bitcoin Price Crash Triggered by Federal Reserve – Neutral news. The market may experience a temporary crash due to liquidity issues, but a rebound is expected.
3. Bitcoin Price Crash Wipes $2 Trillion from Crypto Market, But Rebound Expected – Neutral news. The market may experience a significant decline, but history suggests that Bitcoin will recover and become stronger.
4. Bitcoin ETF Approval Could Present Buying Opportunity for Long Positions – Positive news. The approval of ETFs could lead to a temporary pullback in the Bitcoin price, providing a favorable chance for investors to accumulate long positions.
5. BlackRock-led Wall Street Pushes Bitcoin Price Up as Spot ETF Nears Approval – Positive news. The involvement of major financial institutions and the potential approval of ETFs could lead to increased adoption and validation, resulting in further price appreciation in the long run.
