The cryptocurrency market that was on the rise in March went downhill, with the Bitcoin price falling below the $66K mark.
Notably, this drop has caused massive dealing of $5.2 billion for short-term Bitcoin investors. Bitcoin, which posted a 50% surge in value since the start of the first quarter of 2021, now faced an upheaval, and investors consequently found themselves in a volatile environment.
Impact on Short-Term Holders
Short-holders, that is, the investors who have been in the market for less than 155 days, are the most hit due to recent market instability. The abrupt reversal of the downward motion, which was borrowed out by 2.4% on Apr. 2 and followed by a 6% decline on Apr. 3, kicked off a rush of people to sell out. This sell-off was desperate, with fear of the crunch and a downward trend in Bitcoin exposed.
As per the press time reports, BTC was trading at $66,364, showing a 0.12% increase in the last 24 hours, according to data by CoinMarketCap.
BTC/USD 1-day price chart (Source: CoinMarketCap)
According to a Glassnode report, Bitcoin transfer volume dropped from nearly $4 billion to less than $500 million during the price surge. This points to the considerable decline in trading activity because short-term investors held on to their funds, probably expecting the next wave of instability in the market.
Market Analysis and Predictions
Cryptocurrency analysts, among them Michaël van de Poppe, have commented on the situation, arguing that Bitcoin could start trading sideways with restrained chances of quick recovery. The analysis of Van de Poppe suggests that the price may dip to $57,500 should the $70,300 resistance level not be subverted by Bitcoin. He also surmised that there would be a lessened domination of Bitcoin with time, leading to the rise in the activity of altcoin. However, he expects this change to be gradual.
Period of consolidation for #Bitcoin.
I don't expect much upside to be happening, I do believe that we're consolidating for the coming period and slowly, but surely, starting to get momentum towards #Altcoins. pic.twitter.com/yuLfnuLZYy
— Michaël van de Poppe (@CryptoMichNL) April 4, 2024
Following the market downturn, Bitcoin whales have become quite active, as they are considered to be accumulating more assets to help the market recover. According to Ali Martinez, a Crypto analyst, about 21,400 BTC or about $1.40 billion has been transferred to the whale accumulation addresses. Such activities are generally taken as a good indicator of potential market recovery, as they indicate the faith of some of the powerful players in the market.
21,400 $BTC, worth around $1.40 billion, were moved to accumulation addresses! pic.twitter.com/oYhMj481g8
— Ali (@ali_charts) April 4, 2024
Long-Term Prospects Amidst Short-Term Volatility
The long-term potential of Bitcoin is still of the highest interest and speculations despite short-term volatility and big losses that many investors have experienced. Data from the past regarding Bitcoin’s performance in post-halving periods could reveal the chances of huge price rises.
Moreover, projections based on past trends have led some to speculate that Bitcoin could increase by 3,230% after halving. Nevertheless, it is important to remember that each post-halving rally has given a smaller percentage of profits, suggesting that returns will be less great in the future.
Bitcoin ETFs are becoming more noticeable in the market, deviating from the standard halving-driven cycles. The entrance of capital into spot Bitcoin ETFs is identified as a major factor of the recent price rally, which implies a change in the determinants of Bitcoin’s market value.
According to a Feb. 26 post on X, Bloomberg analyst Eric Balchunas highlighted that the pace at which Bitcoin ETFs have grown is much faster than what the early years of gold ETFs witnessed. Therefore, this depicts a possible swiftness in the mainstream acceptance and adoption of Bitcoin as a professional financial asset.
Gold's Pain is Bitcoin ETFs' Gain in Store of Value Smackdown.. new from me on how gold being in the gutter is like the cherry on top for bitcoin fans who just got to witness the biggest ETF launch ever. Decent chance bitcoin ETFs pass gold ETFs in aum in less than 2yrs w… pic.twitter.com/rXJra1dyhF
— Eric Balchunas (@EricBalchunas) February 26, 2024
The recent happenings in the Bitcoin market only reaffirm that cryptocurrencies are highly volatile and unpredictable. This unpredictability has left short-term investors to bear the biggest loss, especially in just days of billions in losses. Yet, the behavior of Bitcoin whales and the developing world of Bitcoin ETFs offer some clues about the possible stabilization and growth of the market.
The post Bitcoin Plunge Below $66K Costs Short-Term Investors $5.2B appeared first on Coinfomania.
