Bitcoin Price Plummets Due to Long Liquidations, Macro Conditions, and Negative Coinbase Premium
Today’s Bitcoin price movement is a result of various factors that have caused a significant dip in its value. These factors include:
#1 Long Liquidations
A massive liquidation event on the futures market has triggered a sharp drop in Bitcoin’s price. In the past 24 hours, over $682.54 million worth of crypto trader liquidations have been recorded across more than 191,000 traders.
- This surge in liquidations led to an 8% decrease in Bitcoin’s price within hours, falling from $72,000 to $66,500.
- While there was a minor recovery with Bitcoin rebounding to the $68,000 level, it still remains nearly 10% below its all-time high of $73,737.
- About 80% of these liquidations were long positions, contributing to $544.99 million of the total. Short position liquidations accounted for the remaining $136.94 million.
#2 Macro Conditions Weighing On Bitcoin Price
The macroeconomic landscape has also added pressure to Bitcoin’s value. Macro analyst @tedtalksmacro highlights the influence of macro conditions on the cryptocurrency market.
- He emphasizes that if BTC is considered digital gold, it is expected to trade in sync with gold but with higher volatility.
- The upcoming Federal Reserve meeting and its impact on macroeconomic factors are expected to temporarily take center stage.
- Recent data on the US Producer Price Index (PPI) showed a 0.6% increase in February, surpassing expectations and leading to a rise in US bond yields.
- These developments have caused traders to adjust their expectations for the Federal Reserve’s interest rate policies in 2024.
- Mohamed A. El-Erian from Allianz and Gramercy notes the challenges posed by persistent inflation to achieving the Fed’s 2% inflation target.
#3 Negative Coinbase Premium / Quiet Bitcoin ETF Day
The decline in Bitcoin’s price below $70,000 is also attributed to the negative Coinbase Premium, which indicates a bearish sentiment from US markets. This phenomenon is likely due to significant sales of Grayscale GBTC, while the spot ETF experienced relatively calm activity.
- After a record $1 billion net inflow day for the spot ETF on March 12, recent inflows dropped to just $132.7 million.
- Blackrock contributed the majority of these inflows with $345.4 million, while Fidelity and ARK saw minimal inflows.
- GBTC outflows were reported at $257.1 million, aligning with average levels.
- Crypto analyst WhalePanda suggests that despite reduced inflows, $132.7 million is still equivalent to two full days of mining rewards and expects a potential rebound in the market.
Hot Take: Bitcoin Price Plunge Amidst Liquidations and Macro Pressures
Today’s Bitcoin price drop can be attributed to several factors including long liquidations, macroeconomic pressures, and the negative Coinbase Premium. These factors have combined to cause a noticeable dip in Bitcoin’s price, which currently stands nearly 10% below its all-time high.
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