Bitcoin Price Tumbles Below $66,000: 4 Major Reasons
02 Abril 2024 - 5:50AM
NEWSBTC
The Bitcoin market has witnessed a significant downturn, with
prices plummeting below the $66,000 mark. This abrupt -5.6% price
movement can be attributed to four major factors: a long
liquidation event, a rising US Dollar Index (DXY), profit-taking by
investors, and spot Bitcoin ETF outflows. #1 Long Liquidations The
main force leading to today’s downturn in Bitcoin’s price was a
significant deleveraging event characterized by an unusually high
level of long liquidations. Before the downturn, Bitcoin’s Open
Interest (OI) Weighted Funding Rate was unusually high, indicating
that leveraged traders were paying premiums to maintain long
positions in anticipation of future price increases. This optimism,
however, made the market vulnerable to sudden corrections. Related
Reading: Hedge Fund Manager Predicts When Bitcoin Price Will Reach
$150,000 Crypto analyst Ted, known as @tedtalksmacro on X (formerly
Twitter), remarked, “Today was the largest long liquidation event
since the 19th March.” He further elaborated on the effects of this
correction by noting, “Nice reset in overall positioning today,
even on just a 5% drop lower for Bitcoin… Next leg higher is
loading I think.” This comment highlights the severity of the
liquidations and suggests a potential rebound or restructuring
within the market as it stabilizes. Coinglass data reveals that
over the last 24 hours, 120,569 traders were liquidated, amounting
to $395.53 million in total liquidations, with $311.97 million
being long positions. Bitcoin-specific long liquidations were at
$87.42 million. #2 DXY Puts Pressure On Bitcoin With 105.037, the
DXY closed at its highest level since November yesterday,
evidencing a strengthening US dollar. Given Bitcoin’s inverse
correlation with the DXY, the stronger dollar might have shifted
investor preference towards safer assets, moving away from riskier
investments like Bitcoin. This correlation stems from the global
market’s risk sentiment, where a rising DXY often signals a shift
towards safer investments, detracting from riskier assets like
Bitcoin. However, analyst Coosh Alemzadeh provided a counter
perspective, suggesting through a Wyckoff redistribution schema
that despite the DXY’s recent uptick, the next move could favor
risk assets, potentially including Bitcoin. #DXY ⬆️4 weeks in a
row/broke out of its downtrend so consensus is that a new uptrend
is starting yet risk assets are consolidating at ATH Next move ⬆️in
risk assets on deck IMO pic.twitter.com/u6ORa76vkj — “Coosh”
Alemzadeh (@AlemzadehC) April 2, 2024 #3 Profit Taking By Investors
Profit-taking by investors has also played a significant role in
the recent price adjustments. The Bitcoin on-chain analysis
platform Checkonchain reported a spike in profit-taking activities.
Related Reading: Start Selling Bitcoin When This Happens, This
Quant Says Glassnode’s lead on-chain analyst, Checkmatey, shared
insights via X, stating, “The classic Bitcoin MVRV Ratio hits
conditions we characterize as ‘heated, but not yet overcooked’.
MVRV = above +0.5sd but below +1sd. This indicates that the average
BTC holder is sitting on a significant unrealized profit, prompting
an uptick in spending.” The profit-taking coincided with Bitcoin
reaching a peak of $73,000, marking a cycle high in profit
realization with over 352,000 BTC sold for profit. This selling
behavior is typical in bull markets but plays a crucial role in
creating resistance levels at local price tops. #4 Bitcoin ETF
Outflows Lastly, the market witnessed notable outflows from Bitcoin
ETFs, marking a reversal from last week’s substantial inflows. The
total outflows amounted to $85.7 million in a single day, with
Grayscale’s GBTC experiencing the most significant withdrawal of
$302 million. Meanwhile, Blackrock’s IBIT and Fidelity’s FBTC
reported positive inflows, totaling $165.9 million and $44 million,
respectively. Commenting on this, WhalePanda remarked, “Overall
negative day but not as negative as the price implied. Closing of
Q1 so taking profit here makes sense. Some fuckery around [the] new
quarter and halving is to be expected.” At press time, BTC traded
at $66,647. Featured image created with DALL·E, chart from
TradingView.com
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