Altcoins experienced significant decline , possibly due to spot Bitcoin ETF outflows, amidst overall crypto market volatility.
The cryptocurrency market faced a significant downturn on Monday, with several top altcoins experiencing double-digit decline. Analysts are at a loss to identify a single clear catalyst for this sudden drop, though some suggest it might be linked to recent outflows from spot Bitcoin ETFs.
The overall market cap for cryptocurrencies fell to $2.46 trillion, marking a 3.5% decline within 24 hours. Among the hardest-hit were Shiba Inu (SHIB) and Avalanche (AVAX), which plummeted 12.7% and 10.6%, respectively, according to CoinGecko data. Uniswap (UNI) and Dogecoin (DOGE) also saw significant declines, while Solana (SOL) dropped by 9.4%. Notably, Ripple’s XRP was the only top non-stablecoin to avoid the red, managing a slight 0.1% increase.
In contrast, Bitcoin (BTC) and Ether (ETH) experienced smaller declines, falling 1.3% and 4.4%, respectively. Henrik Andersson, the chief investment officer at Apollo Crypto, pointed to reduced interest in spot Bitcoin ETFs as a possible contributing factor. This reduced interest might have caused weakness in altcoins, leading to the liquidation of leveraged long positions in Bitcoin, Ethereum, and Dogecoin.
Bitcoin ETF Outflows and Their Impact
Spot Bitcoin ETFs have faced outflows on five out of the last six trading days, based on data from Farside Investors. This trend has caught the attention of digital asset firms, such as 10xResearch, which correlate the recent altcoin crash with the declining spot Bitcoin ETF flows. However, they propose an inverse relationship: instead of the altcoin crash causing the ETF outflows, it might be the ETF outflows precipitating the altcoin decline.
Interestingly, Bitcoin’s inability to rally despite weak inflation data has puzzled analysts. This lack of upward momentum in Bitcoin, alongside the sharp drops in Ethereum and other altcoins, indicates a broader market sentiment shift. While Ethereum and other altcoins have suffered, Bitcoin’s price has shown relative stability, albeit with minor declines.
Resilience in Bitcoin Mining Stocks
Amid the broader market downturn, Bitcoin mining stocks have shown resilience. These stocks have been performing well in recent weeks, recovering from the April halving event. According to industry analysts, fears about post-halving profitability led to underperformance in mining stocks prior to the event. However, as these fears subsided, mining stocks began to regain lost ground.
The Valkyrie Bitcoin Miners ETF (WGMI) has surged approximately 54% since the halving, reflecting renewed market confidence in the mining sector. This recovery contrasts sharply with the broader cryptocurrency market’s current struggles, highlighting the distinct dynamics at play within the different segments of the crypto industry.