Bitcoin ETFs experience their worst day of all time
Bitcoin’s price has dropped by nearly ten percent, causing considerable turbulence in the market for financial products. Bitcoin futures ETFs have experienced their most significant day of trading losses.
The United States stock market is highly feared because it was shaken last Friday. This is because Bitcoin experienced its worst day in over a month and went from 25,500 USD down to about 23,000 USD. For Bitcoin futures ETFs, this significant price drop led to severe consequences. This resulted in the largest daily price decline for relevant ETFs since their listing. This market data was published by Bloomberg journalist James Seyffart in a tweet.
A major reason for Bitcoin ETFs collapsing Friday is the high leverage these products employ. Bitcoin futures ETFs try to mimic Bitcoin’s performance by using derivatives such as options or contracts for difference and can be substantially affected if market movements are against them. Consequently, Friday was the most important day for Bitcoin futures ETFs in terms of value losses.
In addition to the turbulent scene in the futures market, options for Bitcoin are also heavily impacted. Open options positions worth over 1 billion USD were wiped out on Friday. This was observed by Coinglass, an analytics service in the crypto industry.
The backdrop to this entire development is widespread worries among investors about inflation and how Federal Reserve monetary policies, for example, will evolve. Riskier assets like Bitcoin and stocks suffer from these concerns. However, the U.S. regulatory landscape also plays a crucial role since speculative products like Bitcoin futures ETFs attract retail investors who are intrigued by the potential for high returns, although facing associated risks. The recent events in stock markets have reminded many investors how quickly such risks can materialize so that Bitcoin futures ETFs have experienced a wave of sell-offs from small investors.
The weekend also didn’t end well for Bitcoin, which hovered between the 23,000 USD and 24,000 USD levels up to Sunday evening. Many investors are keenly aware of the next crucial hurdle coming: On May 4, the U.S. Federal Reserve will reveal its latest decisions regarding interest rates, and analysts believe that another rate increase is on the agenda. Ahead of this, Bitcoin has yet to appeal again to its investors with strong psychological nerves and focuses in the coming days.
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