The tumultuous crypto market experienced a significant surge in trading activity for Bitcoin ETFs on August 5th, surpassing $1 billion. This surge was marked by an extraordinary volume as the market plummeted, highlighting an “extremely elevated” trading environment, as noted by Alex Thorn, head of research at Galaxy Digital, on the X platform.

Within a mere 20 minutes of trading, Bitcoin ETFs amassed more than $1.3 billion in volume. The iShares Bitcoin Trust led this frenzy, with trading volume soaring above $875 million, according to Thorn’s post.

Thorn anticipates that Bitcoin ETFs will experience net inflows driven by “dip buying,” as investors seek to capitalize on an approximately 8% decline in spot Bitcoin prices since August 4th. This downturn was primarily driven by Ether (ETH), which saw a precipitous drop of over 21%. This was after prominent funds, including Jump Trading and Paradigm VC, liquidated hundreds of millions of dollars’ worth of Ether, according to a report by QCP Group dated August 5th. Analysts indicate that Jump has already sold over $377 million in ETH, with the potential liquidation reaching up to $481 million.

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The overnight sell-off exacerbated an already deteriorating macroeconomic environment, unsettling all asset classes. The S&P 500 index has declined by more than 5% since August 1st.

The report further elaborates, “Macro sentiment has also deteriorated following disappointing US unemployment data last Friday. Additionally, massive unwinds across all assets have caused a sharp spike in volatility.”

Japan’s central bank’s decision to raise interest rates on July 30th prompted traders to hastily unwind positions that were designed to exploit the country’s previously low borrowing costs.

Markus Thielen, founder of 10x Research, conveyed to Cointelegraph his outlook on the market, suggesting a slowdown in new crypto investments until stability returns:

“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.”