Some speculate that the abrupt sell-off in cryptocurrencies may have been caused by the US economy and a faltering narrative surrounding ETFs.
A turbulent day that saw cryptocurrency liquidations totaling over $661 million in the last 24 hours, impacting almost 200,000 traders, saw the price of Bitcoin plummet.
Early on March 15, Bitcoin fell from $72,000 to $66,500, a 7.5% loss in a matter of hours.
According to data from Tradingview, the asset somewhat recovered to recapture the $68,000 mark before being rejected there and plunging much lower to about $67,500, where it was trading at the time of writing. The price has dropped 8.3% from its all-time high of $73,737 on March 14.
With $525.2 million in liquidations in the last 24 hours, long holdings accounted for the great bulk of these transactions, or 80%. Liquidations of short positions came to $136.5 million.
The value of the cryptocurrency market fell 7.3% on the day to $2.68 trillion as about $175 billion left the market.
On March 14, Greeks Live, a provider of tools for cryptocurrency derivatives, stated on X that there had been a “recent change in market tempo.” The company also stated that “the current narrative of ETF inflows may be starting to turn.”
Lead analyst Pav Hundal of the Australian cryptocurrency exchange Swyftx told Cointelegraph that if ETF volumes keep falling, there may be a correction back into the low $60,000 to high $50,000 range.
“We would expect a significant correction if there is a sustained downdraft in ETF volumes, as many investors are concerned about hot inflation data.”
He continued, “What’s concerning is that yesterday’s Bitcoin ETF [inflow] volumes were down 48% on their 14-day average.”
According to statistics from Farside Investors, aggregate spot inflows into Bitcoin ETFs were just $133 million on March 14, which is the lowest amount they have been this month.
“It appears that the decline we’ve been anticipating is finally happening,” cryptocurrency trader and analyst “CrediBULL Crypto” stated to his 380,000 X followers.
He continued, saying that the much of the built-up open interest (OI) in the futures markets had been destroyed by the recent decline.
He then predicted that there was still some way to go, with BTC potentially falling to $63,000 to $64,000.
It’s possible that the drops were sped up by this week’s US economic data releases.
The Federal Reserve’s forecasts for extended high rates were bolstered by new PPI (Producer Price Index) data that exceeded expectations.
America’s economic problems are thought to have worsened as a result of earlier this week’s hotter-than-expected Consumer Price Index (CPI) statistics.
Friday saw a decline in Asian stock markets as U.S. economic data shattered expectations of imminent interest rate cuts.
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The volatility of the cryptocurrency market was starkly illustrated in the wake of Bitcoin’s sudden 7% decline, sending shockwaves through the digital asset space.
Within just 24 hours of this dramatic downturn, a staggering $660 million worth of positions were liquidated, underscoring the high stakes and rapid shifts characteristic of the crypto landscape.
Bitcoin’s sharp decline rattled investors and traders, triggering a cascade of liquidations across various exchanges.
Margin calls were swiftly executed as leveraged positions faced significant losses, amplifying the market sell-off and intensifying the downward pressure on prices.
The suddenness of the drop caught many off guard, highlighting the inherent risks associated with trading cryptocurrencies, particularly on margin.
The liquidation event serves as a stark reminder of the volatility and unpredictability inherent in the cryptocurrency market.
Despite Bitcoin’s status as the leading digital asset, it remains susceptible to sudden price swings driven by a myriad of factors, including macroeconomic trends, regulatory developments, and market sentiment.
Such episodes underscore the importance of risk management and caution in navigating the ever-evolving crypto landscape.
In the aftermath of the liquidation spree, investors and traders are left to reassess their strategies and exposure to mitigate potential losses in the future.
While Bitcoin’s resilience and long-term potential remain undiminished, the event serves as a sobering reality check for participants in the crypto market, emphasizing the need for vigilance and preparedness in the face of rapid price fluctuations and market turbulence.
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