• Outflows from all nine Bitcoin ETFs on Tuesday amounted to $326 million, highlighting a notable shift in market sentiment, especially among institutional investors anticipating the FOMC decision.
• Bitcoin’s decline is compounded by uncertainty surrounding the Federal Reserve’s response to inflation, impacting the broader cryptocurrency market.

The world’s largest cryptocurrency Bitcoin (BTC) has entered a steep correction slipping way down to $61,000 and extending its weekly losses to 15%. As of press time, Bitcoin is trading at $63,180 with a market cap of $1.24 trillion.

The Bitcoin price has hit a two-week low as the inflows into spot Bitcoin ETFs have been drying up considerably, as reported by Crypto News Flash. According to data from Farside investors, the collective outflows from all nine Bitcoin ETFs on Tuesday amounted to $326 million, marking more than double the outflows from the previous day. This consecutive day of outflows suggests a shifting sentiment in the current market landscape.

Among the Bitcoin ETFs, the BlackRock Bitcoin ETF IBIT saw net inflows of just $75 million, with Fidelity’s FBTC following closely at $39.6 million. Conversely, most other Bitcoin ETFs recorded minimal inflows, as indicated by data from Farside. It appears that institutional investors are adopting a cautious approach in anticipation of the FOMC decision scheduled for Wednesday, March 20.

Meanwhile, the Grayscale Bitcoin ETF GBTC continued its trend of significant outflows, with a staggering $444 million reported on Tuesday, per the Crypto News Flash report. Grayscale disclosed a further loss of 6,860 Bitcoin, equivalent to approximately 1.9% of its total Bitcoin holdings.

Notably, this occurred despite Grayscale CEO Michael Sonneshien’s announcement of an impending reduction in fees for GBTC. However, this initiative seems to have had little effect on investor sentiment.

Bitcoin Fumbles Ahead of the FOMC Meeting

Bitcoin’s decline coincides with uncertainty surrounding whether the Federal Reserve’s response to above-target inflation will involve revising rate-cut projections during their meeting on Wednesday, which could create a less favorable environment for speculators.

Tony Sycamore, a market analyst at IG Australia Pty, suggests that Bitcoin’s recent challenges stem in part from the Fed’s outlook. He notes that latecomers who entered the market above the $60,000 mark, anticipating continuous inflows into the new Bitcoin ETFs, are now facing a reality check.

Amid the recent correction in Bitcoin, the broader cryptocurrency market has shed approximately $660 billion since peaking at $2.9 trillion last week. Tokens like Ether, BNB, and the meme-crowd favorite Dogecoin are all experiencing losses during this period.

K33 Research suggests that liquidation of bullish positions through derivatives trading might continue, potentially posing a hurdle to a swift recovery in the digital asset market. In a note to investors, K33 Research’s Anders Helseth and Vetle Lunde wrote:

Risks are thus still considerable for continued amplified downside volatility stemming from long liquidations.

Data from Coinglass indicates that over $600 million worth of bullish cryptocurrency positions were liquidated in the last 24 hours, marking one of the most substantial drops of this kind observed in the past two weeks.