Bitcoin, the leading cryptocurrency, experienced a minor downturn in price, dipping below the $67,000 mark on Tuesday morning, effectively reversing the gains made in the previous week. Data sourced from CoinGecko indicates that the asset is currently trading at $66,139, reflecting a decrease of 4.6% within the day and a 6% loss over the course of the week.
Bitcoin registers a significant decline in value
The entire cryptocurrency market mirrored Bitcoin’s decline, witnessing a substantial drop of 5.2% to $2.6 trillion, resulting in the loss of over $122 billion from the market. With the exception of stablecoins, digital assets within the top 30 by market capitalization also experienced notable losses, with Ethereum declining by 6% to reach a trading price of $3,331.
However, the most significant losses in this category were observed in Bitcoin Cash and Aptos, which posted declines of 9.9% and 13.5%, respectively. According to data sourced from CoinGlass, the cryptocurrency market also saw the liquidation of over $426 million within the last 24 hours, with long liquidations accounting for $342 million of this figure.
Furthermore, Bitcoin contributed to liquidations exceeding $90 million in long positions overnight. This decline in prices coincides with a notable performance by the US dollar, as its index (DXY) surged above 105 for the first time this year. The DXY index serves as a metric for gauging the value of the US dollar against a basket of major currencies, including the euro, yen, and Canadian dollar.
Institutional presence and the upcoming halving
The market-wide decline coincides with a period of heightened volatility as investors brace for the upcoming halving event scheduled for April. During the halving event, the rewards received by miners for validating transactions on the Bitcoin network will be halved, a phenomenon designed to reduce the rate at which new Bitcoins are created. This reduction in supply is typically anticipated to drive the price of Bitcoin upward, as historical data suggests.
However, there is ongoing debate surrounding whether this impending halving event has already been factored into the market’s expectations. Some analysts argue that the potential price surge may not materialize as anticipated due to a “crisis of faith” among investors, who may be hesitant to fully commit to the bullish narrative surrounding the halving.
Moreover, the timing of this halving event is notable, occurring at a juncture when Bitcoin has already reached record highs, buoyed by the recent approval of spot Bitcoin exchange-traded funds (ETFs) in the United States. The influx of institutional investors purchasing Bitcoin, coupled with the impending supply reduction from the halving, has been cited by analysts as a bullish indicator for the cryptocurrency.
Additionally, a recent report from Coinbase has suggested that the second quarter (Q2) of the year could prove to be highly lucrative for the crypto market. The report highlights the significant institutional presence in the spot Bitcoin ETF market as a potential catalyst for market growth during this period.