#Bitcoin prices have fallen below the $66,000 threshold, marking a major decline in the market. A lengthy liquidation event, an increasing US Dollar Index (DXY), speculators taking profits, and spot Bitcoin ETF withdrawals are the four main causes of this sudden -5.6% price change.
1 Long Liquidations
A major deleveraging event marked by an abnormally high volume of long liquidations was the primary factor that caused Bitcoin's price to fall today. A very high Open Interest (OI) Weighted Funding Rate for Bitcoin before to the crash suggested that leveraged traders were paying premiums to maintain long positions in the cryptocurrency in the hope that its price would rise further. Nevertheless, the market was susceptible to unexpected declines because of this confidence.
"Today was the largest long liquidation event since the 19th March," crypto analyst Ted, who goes under the handle @tedtalksmacro on X (previously Twitter), said. "Nice reset in overall positioning today, even on just a 5% drop lower for Bitcoin..." he said, expanding on the consequences of the correction. After this leg, I believe the next one is loading. In view of the gravity of the liquidations, this remark raises the prospect of a market recovery or reorganization once conditions settle down.
There were 120,569 trades liquidated in the past 24 hours, totaling $395.53 million, with long holdings accounting for $311.97 million, according to statistics from Coinglass. The total value of long liquidations involving bitcoin was $87.42 million.
2 DXY Puts Pressure On Bitcoin
Yesterday, the US dollar strengthened as the DXY finished at 105.037, its highest level since November. Due to Bitcoin's negative relationship with the DXY, investors may have fled riskier investments like Bitcoin in favor of more stable assets as a result of the higher dollar.
The reason for this association is the way the global market perceives risk. When the DXY goes up, it usually means that people are looking for safer investments, rather than risky ones like Bitcoin. Despite the recent surge in the DXY, analyst Coosh Alemzadeh offered a contrasting viewpoint, arguing that risk assets, such as Bitcoin, may benefit from the next move using a Wyckoff redistribution schema.
3 Investors Retaining Their Gains
A major factor in the recent price changes has also been investors taking profits. There was an uptick in profit-taking activity, according to the Bitcoin on-chain analytical tool Checkonchain.
"The classic Bitcoin MVRV Ratio hits conditions we characterize as 'heated, but not yet overcooked,'" revealed via X by Glassnode's primary on-chain analyst, Checkmatey. > +0.5sd but < +1sd is the value of MVRV. An increase in spending is likely due to the fact that the typical Bitcoin holder is sitting on a large amount of unrealized profit.
With almost 352,000 BTC sold for profit, the profit-taking occurred at the same time that Bitcoin reached a top of $73,000, marking a cycle high in profit realization. At local price peaks, this kind of selling is common throughout bull markets and is essential for establishing resistance levels.
4 Withdrawals from Bitcoin ETFs
Finally, after receiving large inflows last week, the market saw significant withdrawals from Bitcoin ETFs. The largest single-day outflow was $302 million from Grayscale's GBTC, contributing to a total of $85.7 million in losses.
At the same time, an inflow of $165.9 million was recorded by Blackrock's IBIT and an inflow of $44 million by Fidelity's FBTC. "Overall, it was a bad day, although it wasn't as bad as the price suggested," WhalePanda put it in response. I think it would be wise to take a profit now as we are nearing the end of Q1. The new quarter and halves are sure to be accompanied by some nonsense.
