Bitcoin Crashes: Experts Weigh In
The price of Bitcoin has taken a significant hit, dropping from its high of over $73,600 on March 14 to a low of under $60,800 today. This represents a loss in value of -17%, causing a stir among crypto experts on social media platforms. They have been actively discussing the reasons behind this crash and speculating about the future of the leading cryptocurrency.
Identifying the Factors
Alex Krüger, a well-known figure in both macroeconomics and crypto, quickly pinpointed the primary factors contributing to Bitcoin’s price collapse. According to Krüger:
- The crash can be attributed to excessive leverage in the market.
- Ethereum’s negative influence on overall market sentiment due to ETF speculations.
- A notable decrease in Bitcoin ETF inflows.
- The irrational exuberance surrounding Solana memecoins, which he referred to as “shitcoin mania.”
Reasons for the crash, in order of importance
(for those who need them)
#1 Too much leverage (funding matters)#2 ETH driving market south (market decided ETF not passing)#3 Negative BTC ETF inflows (careful, data is T+1)#4 Solana shitcoin mania (it went too far)
— Alex Krüger (@krugermacro) March 20, 2024
WhalePanda, another influential voice in the crypto space, highlighted the alarming rate of ETF outflows. A record $326 million left the market yesterday, with GBTC experiencing outflows of $443.5 million. In contrast, Blackrock’s inflows were only $75.2 million, its second lowest to date. Fidelity saw just $39.6 million in inflows.
Yesterdays ETF flows by @FarsideUK.
We had $326 million in outflows. Biggest outflow to date.
Blackrock didn't save us from $GBTC, which kind of was obvious with the price action.$GBTC had $443.5 million outflows, Blackrock had $75.2 million inflows, their 2nd lowest to… pic.twitter.com/hIingoYMly
— WhalePanda (@WhalePanda) March 20, 2024
Charles Edwards, the founder of crypto hedge fund Capriole Investments, provided a historical perspective on Bitcoin’s recent price movement. He suggested that a 20% to 30% pullback is normal during Bitcoin bull runs. Edwards stated that a 20% pullback would take the price to $59K, while a 30% pullback would bring it down to $51K.
Rekt Capital analyzed Bitcoin’s price retracements since the 2022 bear market bottom and found that the current pullback is only the fifth major retrace. Previous retracements exceeded -20% depth and lasted from 14 to 63 days. The key takeaways are:
The closer Bitcoin gets to a -20% retrace, the better the opportunity becomes.
Retraces need time to fully mature (at least 2-3 weeks, at most 2 months).
Since the November 2022 Bear Market Bottom…
Bitcoin has experienced the following retraces:
• -23% (February 2023) lasting 21 days
• -21% (April/May 2023) lasting 63 days
• -22% (July/September 2023) lasting 63 days
• -21% (January 2023) lasting 14 days
This… pic.twitter.com/cQyQOLA5Zv
— Rekt Capital (@rektcapital) March 19, 2024
Alex Thorn, the head of research at crypto giant Galaxy Digital, had previously warned about significant corrections during bull markets. He stated that a -15% correction is standard historically. Thorn emphasized that bull markets climb a wall of worry.
Macro analyst Ted focused on the implications of the upcoming Federal Open Market Committee (FOMC) meeting. He highlighted the massive outflows from spot BTC ETFs, attributing them to traders being cautious ahead of the FOMC decision and the potential impact of tax season in the US. However, Ted suggested that the market might have fully priced in the worst-case scenario following the drop to $60,800. He hinted at a potential bullish reversal if the FOMC’s decisions align with market expectations for interest rate cuts by year-end.
Time to bid. FOMC hedging done, worst case priced. Only thing that happens from here is that those protective positions unwind into or on the event today. Bulls should step up
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