In a sudden and tumultuous turn of events, the price of Bitcoin (BTC) experienced a substantial downturn, plummeting to $68,241 from its recent all-time high of $73,737. This abrupt drop of 7.5% occurred within a few hours of trading on March 15, shaking the cryptocurrency market.
Record liquidations
The sudden decline in Bitcoin’s price triggered a cascade of liquidations, exceeding a staggering $661 million within 24 hours. This market turbulence impacted nearly 200,000 traders, underscoring the high volatility inherent in the cryptocurrency space.
Despite a brief rebound to reclaim the $68,000 level, Bitcoin encountered strong resistance, slipping further to around $67,500. This marks an 8.3% decrease from its recent peak. Notably, approximately 80% of the liquidations targeted long positions, totaling $525.2 million, while short positions faced liquidations amounting to $136.5 million.
Analysts are expressing concerns over the sustainability of Bitcoin’s bullish momentum, especially given declining exchange-traded fund (ETF) volumes. Pav Hundal, lead analyst at Australian crypto exchange Swyftx, warns of a potential correction back to the low $60,000 or high $50,000 levels if ETF volumes continue to decline. He emphasizes investors’ anxieties regarding inflation data and underscores the significance of ETF volumes as a determinant of market direction.
Market sentiment shift
Greeks Live, a provider of crypto derivatives tools, has observed a recent change in the market tempo, indicating a potential shift in the narrative regarding ETF inflows. The decline in Bitcoin ETF inflow volumes, down by 48% from their 14-day average, has raised investor concerns. Data from Farside Investors shows that aggregate spot Bitcoin ETF inflows reached a monthly low of $133 million on March 14.
CrediBULL Crypto, a prominent crypto trader and analyst, anticipates further downside for Bitcoin, projecting a potential decline to the $63,000 to $64,000 range. He points out the depletion of open interest (OI) in derivatives markets following the recent price drop. Additionally, the release of economic data in the United States, particularly Producer Price Index (PPI) and Consumer Price Index (CPI) figures, has fueled market uncertainty.
Impact of economic data
The release of U.S. economic data this week, which included higher-than-expected Producer Price Index (PPI) and Consumer Price Index (CPI) figures, has added to market jitters. Projections suggesting that the Federal Reserve may maintain high interest rates for an extended period in response to elevated inflation levels have further intensified investor concerns. The disappointing economic data has also dashed hopes for imminent interest rate cuts, resulting in a retreat in stock markets across Asia.