Why did BTC price fall $3,000 on Friday despite impressive Bitcoin ETF inflows?

After days and days of posting gains and testing the price of $72,000, bitcoin reversed its trajectory on Friday and was down more than three thousand in hours.

It begs the question of why this happened since inflows continue to flow into US-based ETFs.

The impact of the Bitcoin ETF

It’s safe to say that the biggest and most vital news in the cryptocurrency industry this year has been the ETFs that the US Securities and Exchange Commission gave the green light in January. Not the halving, which is usually all people can talk about every four years, but specifically Bitcoin ETFs (the impact of Ethereum ETFs will be known after launch).

After all, numerous financial giants, including BlackRock and Fidelity, became issuers of an exchange-traded fund with an underlying asset, a cryptocurrency – this is a phrase that would not have made much sense five years ago. Now, however, retail investors as well as institutions can easily gain exposure to bitcoin performance without having to worry about storing some mystical keys and remembering complicated passwords.

The effects were immediate, as the price of BTC soared more than 50% in weeks and hit a new all-time high of $73,800 about two months after the ETFs launched in the United States. This was the first time the asset hit a new record high before a halving.

Subsequent price movements were also heavily affected by the entry or exit of these financial vehicles. For example, BTC fell heavily in mid-April and early May, when investors were withdrawing substantial amounts almost daily. Price movements changed when their behavior changed in mid-May and so far in June.

In fact, ETFs are on their best streak since they were born. The last time they heard departures was a month ago, on May 10. This means they have seen entries for 19 days in a row. However, BTC poured heavily on Friday, jumping from $72,000 to $68,500 in minutes.

Why that?

Well, if we can’t blame it on ETF flows, the community has come to a consensus on the main reason. Popular analyst Willy Woo said, “Bitcoin won’t see good things until the last-minute degen records stop chasing the price,” suggesting that there is too much leverage in the system. This theory was echoed several times on Crypto X over the last day or so.

#Bitcoin won’t get good stuff until the last minute degen longs to give up chasing the price.

If you want to go the extra mile, do your liquidation safely and away from being squeezed by whales. pic.twitter.com/RLHHkgK27X

— Willy Woo (@woonomic) June 7, 2024

Another theory that is quite popular among the community involves profit taking. Coming within just 2% of its all-time high of $73,800 meant that almost all of the investors’ funds were in profit, which many see as a good starting point to get money out.

Regardless of the reason, the fact remains that the BTC crash resulted in over $400 million in liquidations in one day. This should be a warning to overleveraged traders to be careful with these potential swings in either direction.

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