BTC sees largest daily drop since FTX collapse: Is it time to buy the dip or will downtrend continue?
TechFlow Selected TechFlow Selected
BTC sees largest daily drop since FTX collapse: Is it time to buy the dip or will downtrend continue?
Bitcoin spot ETF net inflows turn negative, elevated IV signals impending volatility; investors should exercise caution when using leverage to catch the bottom.
Navigating Web3 tides with focused insightsBy Nan Zhi, Odaily Planet Daily
Yesterday, BTC dropped by 5,675 USDT, a decline of 8.39%, marking the largest single-day drop since the FTX collapse on November 9, 2022 (14.15%). Similarly, the broader market experienced a widespread downturn: ETH fell 10.28% yesterday, BNB declined 8.59%, and SOL plunged 13.3%. Today’s market continues to fluctuate slightly, with no clear signs of recovery.
According to CoinGecko data, the total cryptocurrency market capitalization has fallen to $2.43 trillion, down 4.4% over the past 24 hours. Alternative data shows that trader enthusiasm has significantly decreased compared to yesterday. Today's Fear & Greed Index stands at 74, categorized as "Greed," while yesterday's and last week's readings were 79 and 81 respectively, both classified as "Extreme Greed."
In derivatives trading, Coinglass data indicates that total liquidations across all platforms reached $654 million in the past 24 hours, including $487 million in long positions and $167 million in short positions. BTC accounted for $229 million in liquidations, while ETH saw $157 million.
Why the Drop? Likely Due to ETF Outflows Beginning
According to monitoring by Farside Investors, spot Bitcoin ETFs recorded a net outflow of $326.2 million yesterday. On March 18, spot Bitcoin ETFs saw an outflow of $154 million, indicating that the previous trend of continuous inflows has stalled. The main shift lies in weakening inflows into BlackRock's IBIT, which had only $75.2 million in net inflows yesterday—just 8.8% of its peak $849 million on March 12. Meanwhile, outflows from GBTC have remained consistently high, leading to overall net outflows. The chart below illustrates recent changes in ETF fund flows.
Trader and economist Alex Kruger stated that BTC’s recent price drop was catalyzed by several factors, ranked in order of importance:
-
Excessive market leverage;
-
Ethereum dragging down the market (due to low expectations for approval of its spot ETF);
-
Negative fund inflows into Bitcoin ETFs;
-
Meme coin frenzy on Solana.
Two weeks ago, JPMorgan also warned about risks arising from ETFs reaching investment capacity limits, noting in a research note: "Bitcoin’s allocation size in investor portfolios has already exceeded gold on a volatility-adjusted basis."
What’s Next for the Market?
10x Research: Buy the Dip Below $60K for BTC
Yesterday, Markus Thielen, founder of 10x Research, suggested that Bitcoin may need to fall below $60,000 before any meaningful rebound begins. In his report, he explained why he turned bearish over ten days ago and emphasized that buying the dip is still premature. A key factor behind his bearish stance is cooling retail trading sentiment, reflected in significantly lower trading volumes in altcoins and meme coins. Additionally, spot Bitcoin ETFs have seen net outflows for two consecutive days. Technically, Thielen still believes Bitcoin will trade below $60,000 before attempting a more substantial recovery. Based on prior new-high signals, he sees potential for BTC to rebound toward $83,000 and even $102,000—but for now, risk management remains the priority.
HashKey: Risk-Adjusted Crypto Returns Still Outperform Other Assets After Correction
HashKey Exchange posted on X, stating that despite Bitcoin falling 13% from $73,000 to $63,000, investors should remain calm and keep in mind:
-
Crypto markets are relatively volatile, meaning prices can swing widely;
-
Despite volatility, crypto’s risk-adjusted returns still outperform other asset classes;
-
For long-term holders, volatility tends to smooth out over time.
Spot Ethereum ETF Approval Unlikely by May
Bloomberg ETF analyst James Seyffart noted that the likelihood of a spot Ethereum ETF being approved in May has diminished significantly. He said: "My cautiously optimistic outlook on spot Ethereum ETFs has shifted over recent months. We now believe these applications will likely be rejected in this round, with decisions due by May 23. The U.S. SEC has not engaged in specific discussions with issuers regarding Ethereum—completely opposite to the situation last autumn ahead of Bitcoin spot ETF approvals."
Currently, seven firms are seeking to launch spot Ethereum ETFs: BlackRock, Fidelity, Invesco Galaxy, Grayscale, VanEck, ARK 21Shares, and Hashdex. Two weeks ago, the U.S. SEC postponed decisions on Hashdex and ARK 21Shares’ applications, extending their decision deadlines to May 30 and May 24, respectively.
Is Something Big Coming?
Lin Chen, Head of APAC Business at Deribit, posted on X that ETH’s implied volatility (IV) has surged above 80 again, currently at 81.8, signaling that the market anticipates significant turbulence ahead. Lin Chen added: "This doesn’t necessarily mean further downside—the price is already oversold… The market is panicking. As a trader, this is actually a good time to sell puts and hedge with short futures—to earn Vega and Theta profits."
(Odaily Planet Daily note: Vega measures an option's sensitivity to changes in implied volatility. When uncertainty increases, Vega rises; selling puts effectively earns positive Vega. Earning Theta refers to profiting from the decay of an option’s time value.)
Conclusion
With Bitcoin halving approaching, market volatility is intensifying. At the same time, the halt in net inflows into spot Bitcoin ETFs suggests that U.S.-based supporting demand may not return to previous levels in the near term. Although the market has already declined, investors should still monitor leverage levels carefully and guard against sharp drops toward $60,000 or lower.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
Odaily
