Crypto flashes red as ETF flows reverse

Markets faced a sharp downturn as crypto sectors experienced a broad sell-off, with Bitcoin (BTC) leading the decline at -4.5%. Traditional assets like the Nasdaq 100 and S&P 500 also slipped, while gold saw a retracement amid rising Treasury yields. The crypto landscape showed significant bifurcation: miners and layer-2 solutions performed positively, whereas sectors like AI and DePIN faced notable losses. The sell-off coincided with traders reassessing risk exposure ahead of key economic indicators including the US payrolls report. Furthermore, recent BTC ETF flows indicated reduced institutional interest, transitioning from inflows to significant outflows exceeding $500 million, suggesting a cautionary shift in market sentiment. The volatility increased as BTC dominance rose amidst declining altcoin values. A crucial focus will be on upcoming economic releases which may influence crypto's direction in the near term. Additionally, discussions arose surrounding Morpho's governance and management of its permissionless vaults amid recent criticisms following substantial user fund losses.

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