Trading volumes for Bitcoin (BTC) exchange-traded funds (ETFs) soared past $1 billion as trading commenced on August 5, driven by plummeting markets that led to “extremely elevated” trading activity in the crypto sector, according to Alex Thorn, head of research at Galaxy Digital. In a post on the X platform, Thorn highlighted that within just 20 minutes, Bitcoin ETFs recorded over $1.3 billion in trading volume, with iShares Bitcoin Trust leading the pack at over $875 million.
Thorn anticipates net inflows for BTC ETFs due to “dip buying” as investors rush to capitalize on an approximate 8% drop in spot BTC prices since August 4. This decline followed a significant downturn in Ether (ETH) prices, which plunged by over 21%. The sharp drop was attributed to substantial sales by funds such as Jump Trading and Paradigm VC, who offloaded hundreds of millions of dollars worth of Ether, as reported by QCP Group on August 5.
Bitcoin prices have fallen around 8% in the past day, according to CoinMarketCap. Related reports indicate that the crypto market crash was triggered by “aggressive” selling by Jump Trading, with analysts noting that Jump has already sold over $377 million in ETH and may plan to liquidate up to $481 million in total.
The overnight sell-off exacerbated a deteriorating macroeconomic environment affecting all asset classes. The S&P 500 index has dropped more than 5% since August 1. The report further stated, “Macro sentiment has also worsened following poor US unemployment data last Friday. Additionally, huge unwinds across all assets [have] caused volatility to spike sharply.”
Japan’s central bank raised interest rates on July 30, prompting traders to rapidly unwind positions that had taken advantage of the country’s low borrowing costs.
Markus Thielen, founder of 10x Research, expressed to Cointelegraph his expectation of a slowdown in new crypto investments until the market stabilizes: “The market structure, including fiat-to-crypto on-ramps, has been weak for months […] It’s unlikely that significant players will invest amid high volatility and unpredictable prices. Many still need to exit positions and deleverage their portfolios.”
