Bitcoin, the world’s largest cryptocurrency, experienced a significant price drop on March 15, The digital asset fell from $72,000 to $66,500 in a matter of hours, with liquidations exceeding $682.54 million across more than 191,000 traders. This sharp decline was primarily driven by long position liquidations, which accounted for 80% of the total liquidations.
TLDR
- Bitcoin price dropped significantly, falling from $72,000 to $66,500 in mere hours, with liquidations exceeding $682.54 million across more than 191,000 traders.
- Macroeconomic factors, such as hotter-than-expected US Producer Price Index (PPI) data and rising US bond yields, are putting pressure on Bitcoin’s value.
- Negative Coinbase Premium, indicating a bearish sentiment from US markets, and reduced inflows into spot Bitcoin ETFs contributed to the decline.
- Some analysts view the pullback as a typical bull breather after sharp uptrends, while others attribute it to uncertainties ahead of the next month’s mining reward halving.
- Grayscale’s continued selling of Bitcoin, moving over $400 million in BTC to Coinbase, added downward pressure to the already hot U.S. inflation figures.
Macroeconomic conditions also played a crucial role in the downward pressure on Bitcoin’s price. The recently released US Producer Price Index (PPI) data, which showed a 0.6% increase in February, surpassed forecasts and led to a rise in US bond yields.
This development has caused traders to adjust their expectations for the Federal Reserve’s interest rate policies in 2024, with the growing awareness of the challenges posed by persistent inflation in achieving the Fed’s 2% inflation target.
The decline in Bitcoin’s price below the $70,000 threshold is also attributed to the “Coinbase Premium” dipping into negative territory for the first time since February 26.
This indicates a bearish sentiment from US markets and is likely a consequence of significant sales of Grayscale GBTC, while spot ETFs experienced relatively calm activity.
Following a record $1 billion net inflow day for spot ETFs on March 12, inflows dropped to just $132.7 million recently.
Some analysts describe the pullback from record highs as a typical bull breather seen after sharp uptrends.
Others attribute the correction to uncertainties ahead of the next month’s mining reward halving, with some stakeholders fearing that Bitcoin’s price will surge too much too soon and could experience a flash crash.
Despite the recent dip, some analysts believe that the broader uptrend will remain intact as long as the demand for spot BTC ETFs persists. QCP Capital, a Singapore-based firm, noted that their desk has seen strong demand for year-end BTC 100-150k calls, suggesting that the market expects Bitcoin to recover and reach new highs.
Another factor contributing to the downward pressure on Bitcoin’s price is the continued selling of the cryptocurrency by Grayscale.
The fund manager moved over $400 million in BTC to its custodian, Coinbase, which added to the already hot U.S. inflation figures. This move comes after Grayscale converted its Bitcoin Trust into an ETF on January 10, allowing investors to redeem their holdings and take home profits.
As the cryptocurrency market navigates through these challenges, it remains to be seen how Bitcoin’s price will respond in the coming days and weeks.
While some volatility is expected, particularly with the release of Federal Open Market Committee minutes next week, the long-term outlook for Bitcoin remains optimistic among many market participants.
