Bitcoin faced its toughest month since the downfall of Sam Bankman-Fried’s FTX empire, as enthusiasm for US spot Bitcoin ETFs dwindled.
In April, the cryptocurrency’s value dropped by nearly 16%, marking a decline only marginally better than that seen in November 2022, as reported by Bloomberg data.
The anticipation of ETFs drove a surge in demand, pushing bitcoin to an all-time high of nearly $74,000 in March.
However, with optimism fading for Federal Reserve interest-rate cuts and a shift away from risky investments, inflows into these products notably diminished.
Spot Bitcoin ETFs See $182 Million in Outflows in April
Tuesday saw a sharp decline of approximately 5%, driving bitcoin to hover around $60,000 and triggering a ripple effect across the entire crypto market.
Smaller cryptocurrencies like Ether, Solana, and meme coins bore the brunt of more significant losses, while shares of crypto companies also ended the day lower.
In April, there was a net outflow of $182 million from the 11 US spot ETFs, starkly contrasting the $4.6 billion net inflow recorded in March.
The approval of these funds by the US Securities and Exchange Commission (SEC) in January exceeded expectations, providing a new avenue for engagement.
The highly anticipated Bitcoin halving, occurring every four years to reduce the supply of new coins and historically acting as a price catalyst, had minimal impact this time around on April 19.
While the halving didn’t directly impact transaction processing, it did halve the amount of new Bitcoin awarded to miners.
Crypto Stocks Suffer More
Cryptocurrency mining companies witnessed more pronounced declines in their stock values compared to bitcoin itself.
Entities like Marathon Digital Holdings Inc., Riot Platforms Inc., Cleanspark Inc., and Cipher Mining Inc. saw drops ranging from 7.9% to 11%.
MicroStrategy Inc., renowned for its corporate Bitcoin strategy, also experienced an 18% plunge following its report of a first-quarter loss of $53 million, attributed to an impairment charge against the value of its bitcoin holdings.
Market watchers had anticipated a potential boost from Asia, particularly with the listing of bitcoin and ether spot ETFs in Hong Kong.
However, the debut on Tuesday failed to instill confidence, as the six new ETFs collectively generated only $11 million in trading volume during their first session.
In contrast to this, the ten US spot Bitcoin products achieved a total volume of $4.6 billion during their debut, showcasing a stark discrepancy.
Ether, the second-largest cryptocurrency, faced an 18% decline in April, marking its most significant monthly drop since June 2022.
The SEC’s request for information from various companies in March, as part of its Ether review, alongside a recent lawsuit by crypto software company Consensys challenging the SEC’s regulatory authority over Ethereum and Ether, have intensified the legal battles between the crypto industry and the regulatory agency.
Other smaller and more volatile tokens like Dogecoin and Polkadot experienced even steeper declines on Tuesday.
These alternative coins, known as altcoins, typically outperform bitcoin during upswings but undergo sharper declines during market downturns.
