The current Bitcoin price movement is a confluence of factors including massive liquidations, macroeconomic pressures, and the impact of a negative Coinbase Premium in addition to Bitcoin ETF dynamics. These elements together have led to a noticeable drop in the price of Bitcoin.
#1 Long liquidations
The current Bitcoin market experienced a significant price drop, initiated by a major liquidation in the futures market. According to Coinglass, crypto trader liquidations in the past 24 hours totaled more than $682.54 million across more than 191,000 traders. facts.
This wave of liquidations resulted in Bitcoin’s price dropping 8% in just a few hours, from $72,000 to $66,500. Although there was a small recovery, with Bitcoin’s price returning to the $68,000 level, the price is currently almost 10% below the March 14 all-time high of $73,737.
A notable 80% of these liquidations were long positions, contributing $544.99 million of the total. Liquidations on short positions made up the remaining $136.94 million, while Bitcoin longs alone were responsible for $242.37 million in liquidations.
#2 Macro Conditions Weighing on Bitcoin Price
The macroeconomic landscape has put additional pressure on Bitcoin’s value. Ted, a macro analyst known as @tedtalksmacro, highlighted on X the influence of macro conditions on the cryptocurrency market.
He declared“If BTC is digital gold, you can expect it to trade in parallel with gold, but with a higher beta.” With the Federal Reserve meeting looming next week, macroeconomic factors are expected to temporarily will play a leading role.
Yesterday’s US Producer Price Index (PPI) data, showing a 0.6% increase in February and beating forecasts of 0.3 month-on-month, has caused a ripple effect with the CPI also recently being hotter than expected, leading to a rise in US bond yields. The benchmark 10-year rate rose 10 basis points to 4.29%, while the two-year rate rose from 4.63% to 4.69%. These developments have led traders to revise their expectations for the Federal Reserve’s interest rate policy in 2024.
Mohamed A. El-Erian, from Queens’ College, Cambridge University, Allianz and Gramercy, noticed on the situation: “US Treasury yields rose today in response to yet another (slightly) higher than expected inflation (this time PPI).” This signals a growing awareness of the challenges that persistent inflation poses to achieving the Fed’s 2% inflation target.
#3 Negative Coinbase Premium/Silent Bitcoin ETF Day
Bitcoin’s decline below the $70,000 threshold is also attributed to “Coinbase Premium” – the exchange that controls the majority of all spot Bitcoin ETFs – entering negative territory for the first time since February 26, indicating a bearish sentiment in the US markets. This phenomenon is likely a result of the significant selling of Grayscale GBTC, while the spot ETF saw relatively quiet activity.
After a record day of net inflows of $1 billion for the spot ETF on March 12, inflows recently fell to just $132.7 million, with Blackrock contributing the lion’s share at $345.4 million. Meanwhile, Fidelity and ARK saw minimal inflows of $13.7 million and $3.5 million, respectively, after a previously strong week. GBTC outflows were reported at $257.1 million, in line with the average level.
Crypto analyst WhalePanda commented on the situation, noting that despite the reduced inflow, “$132.7 million is still two full days of mining rewards.” He suggests a possible recovery of the market and states: “We are just now varying and people with over-indebtedness are being asked for a margin. I think the next step up is for next week.
At the time of writing, BTC was trading at $67,916.
Featured image created with DALL·E, chart from TradingView.com
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