According to CryptoPotato, Bitcoin experienced a significant price drop on Friday, falling from $72,000 to $68,500 within a few hours. This occurred despite the continuous inflows into US-based Exchange-Traded Funds (ETFs). The ETFs, which were approved by the US Securities and Exchange Commission in January, have been a major development in the cryptocurrency industry this year. Financial giants such as BlackRock and Fidelity have become issuers of these ETFs, allowing retail investors and institutions to be exposed to Bitcoin's performance without the need for storing keys or remembering complex passwords.
The impact of these ETFs was immediate, with Bitcoin's price increasing by over 50% in weeks and reaching a new all-time high of $73,800 approximately two months after the ETFs were launched in the US. This was the first time the asset had achieved a new record before a halving. The price movements of Bitcoin have since been heavily influenced by the inflows and outflows from these financial vehicles. For instance, Bitcoin's price fell sharply in mid-April and early May when investors were withdrawing substantial amounts almost daily. However, the price movements changed when investor behavior shifted in mid-May and throughout June.
Despite 19 consecutive days of inflows into the ETFs, Bitcoin's price fell sharply on Friday. Analysts and the community have suggested several reasons for this. One theory, proposed by analyst Willy Woo, suggests that there is too much leverage in the system. Another popular theory involves profit-taking, as Bitcoin was just 2% away from its all-time high of $73,800, which would have put almost all investors' funds in profit. Regardless of the reason, Bitcoin's drop resulted in more than $400 million in liquidations within a day, serving as a warning to over-leveraged traders about potential swings in either direction.