DOGE, XRP Lead Crypto Majors Decline as Bitcoin ETFs Bleed $80M

The cryptocurrency market is once again facing a significant downturn, led by Dogecoin (DOGE) and XRP, as Bitcoin ETFs bled $80 million in outflows. This sudden decline has raised concerns among investors, signaling a possible market correction after recent gains. U.S.-listed Bitcoin ETFs had experienced a streak of inflows over the past week, but Tuesday saw the first net outflow, marking a pause in this bullish trend.


The outflow suggests that some investors are taking profits, possibly due to concerns over Bitcoin's failure to maintain its rally toward $70,000.

As traders responded to these developments, DOGE and XRP led the losses among major cryptocurrencies. DOGE dropped by 5%, while XRP fell by 4%, erasing gains made earlier in the week. These declines were part of a broader market pullback, which saw Bitcoin ETFs face significant net outflows, reducing overall liquidity in the market.

Bitcoin ETFs: Key Players in the Decline

The most noteworthy aspect of this downturn is the significant outflow from Bitcoin ETFs. U.S.-listed Bitcoin ETFs lost a total of $80 million on Tuesday, with Ark Invest’s ARKB ETF seeing the largest outflow at $134 million. This was a record figure for the fund, signaling that investors may be locking in profits or re-evaluating their exposure to Bitcoin.

In contrast, BlackRock’s IBIT ETF attracted $42 million in inflows, suggesting that not all investors are bearish on Bitcoin at this stagee the large outflow from ARKB, other ETFs fared slightly better, with Fidelity’s FBTC and VanEck’s HODL ETF seeing smaller inflows of $8 million and $3 million, respectively.

This suggests that while there was some selling pressure, certain ETFs managed to retain investor interest, potentially due to differences in their holdings or investor base. However, the net result was a clear shift in sentiment away from Bitcoin ETFs, marking the end of a seven-day inflow streak.

DOGE and XRP: Leading the Losses

Dogecoin and XRP were hit the hardest during the market decline, with both tokens leading losses among major cryptocurrencies. DOGE's 5% drop came after a brief surge earlier in the week, spurred by positive sentiment around Elon Musk’s ongoing support for the meme-based cryptocurrency. Similarly, XRP had rallied on the back of positive developments in its ongoing legal battle with the U.S. Securities and Exchange Commission (SEC). However, these gains were short-lived as the broader market correction took hold.

DOGE and XRP’s decline is part of a broader trend in the crypto market, where traders are taking profits after recent gains. This trend is particularly noticeable in major tokens that had rallied earlier in the week. For instance, Bitcoin itself had come close to reaching $70,000 before falling back to around $66,500. This failure to break key resistance levels has spooked some investors, leading to a broader sell-off.

Alex Kuptsikevich, a senior market analyst at FxPro, explained the situation: "The main reason for the entire crypto market’s subsidence seems to be Bitcoin, which the bears defended against an assault on the $70K level." He added that bears intensified their selling at $69,500, driving Bitcoin's price lower over the course of Tuesday.

Stablecoin Liquidity and Market SentimentA crucial factor in the market's downturn is the role of stablecoins, which serve as a key source of liquidity in the crypto market. Stablecoins such as Tether (USDT) and USD Coin (USDC) are often used by traders to quickly enter or exit positions in various cryptocurrencies. However, stablecoin volume has not grown since late September, indicating that liquidity in the market is drying up. This lack of liquidity has contributed to the slowdown in crypto market growth, particularly in Bitcoin and major altcoins.

Kuptsikevich further emphasized this point, stating that "stablecoin volume has not increased since late September, setting up a potential pause in the growth of the broader cryptocurrency market." He noted that the previous growth momentum seen from August to September had been driven by a rebound in overall market capitalization, but this trend has since stalled.

Liquidity is closely linked to the broader cryptocurrency market’s performance, as these assets allow traders to quickly move in and out of positions. When stablecoin volumes stagnate, it signals a potential pause in market activity. This was particularly evident in Tuesday’s trading, where a lack of stablecoin inflows coincided with the broader market downturn.The Broader Crypto Market: What’s Next?

While DOGE and XRP led the losses among major cryptocurrencies, the broader crypto market also experienced significant declines. The CoinDesk 20 (CD20), a liquid index that tracks the largest tokens by market capitalization, fell nearly 2%, while Bitcoin itself lost around 1%. Mid-cap and low-cap tokens saw less dramatic losses, although memecoin Bonk (BONK) and governance token ApeCoin (APE) both dropped over 7%, leading declines among smaller tokens.

Despite the current downturn, some traders remain optimistic about the future of Bitcoin and the broader cryptocurrency market. Many believe that Bitcoin could rally to $80,000 in the coming weeks, especially as the U.S. presidential elections draw closer. The outcome of the elections could inject new volatility into the markets, potentially driving Bitcoin and other cryptocurrencies higher. However, for now, the market remains subdued as traders await new catalysts .

Kuptsikevich soutlook on Bitcoin’s future, stating that while the current market action is sluggish, there is still potential for a new rally in the coming weeks. He pointed to the possibility of a breakout beyond $70,000 as a key milestone for Bitcoin, although this will depend on whether liquidity conditions improve and whether Bitcoin ETFs resume their inflow.

Bitcoin Future Prospects

The recent outflow from Bitcoin ETFs has raised questions about the future of these investment products. While the $80 million outflow on Tuesday marked a significant shift in market sentiment, it is not yet clear whether this trend will continue or if it is simply a temporary blip. The fact that some ETFs, such as BlackRock’s IBIT, managed to attract inflows suggests that there is still demand for exposure to Bitcoin, even in a declining market.

Moreover, the broader crypto market’s performance will likely depend on how quickly liquidity conditions improve. Stablecoins will continue to play a crucial role in providing liquidity, and any increase in stablecoin volume could signal a renewed interest in cryptocurrencies. For now, however, the market remains in a state of flux, with traders watching closely for any signs of a turnaround.

This article reflects the latest developments in the cryptocurrency market, focusing on the impact of Bitcoin ETFs' outflows and the broader market decline led by DOGE and XRP. As the market navigates this downturn, investors and traders will need to monitor liquidity trends, particularly in stablecoins, as these will likely play a key role in shaping the next phase of the crypto market’s trajectory.

Reference
https://www.coindesk.com/markets/2024/10/23/doge-xrp-lead-crypto-majors-decline-as-bitcoin-etfs-bleed-80m/?utm_medium=referral&utm_source=rss&utm_campaign=headlines