The cryptocurrency market is experiencing a significant downturn, with Bitcoin trading near the $89,000 mark as investors react to the latest developments in the ETF space. Following recent volatility and outflows from U.S.-based spot Bitcoin ETFs, there’s a palpable sense of uncertainty about the future direction of the market. 5 consecutive days of withdrawals have been recorded for major funds like iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund, totaling over $700 million in outflows alone. These actions further exacerbated the price decline, pushing Bitcoin down to around $91,000 before stabilizing slightly. 8% of all trading volume is now attributed to bearish orders. This selling pressure has been compounded by concerns regarding hedge funds’ unwinding of their bullish positions on the CME exchange. Some experts believe these funds strategically exploited the price discrepancy between spot ETFs and futures contracts to generate profits from a “basis trade,” leading to increased market volatility. However, this strategy faces difficulties as prices decline, prompting hedge funds to exit by selling ETF shares and buying back CME futures. Arthur Hayes, co-founder of BitMEX, predicts that Bitcoin could potentially drop to $70,000 as a result of these actions. This prediction hinges on the idea that hedge fund activity will continue during U.S. trading hours, adding further downward pressure on the cryptocurrency. Markus Thielen from 10x Research highlights the role of ETFs in driving this recent market shift, pointing out that most demand for Bitcoin ETFs came from arbitrage-driven activities by hedge funds rather than long-term investors. The SEC’s potential approval of new ETFs is eagerly awaited as a key factor in stabilizing the market and attracting fresh capital.