Reasons Why Bitcoin And Altcoins Crashed
1. Friday’s Options Expiry
The market fell in response to over $3 billion in Bitcoin and Ethereum options expiry on Friday, March 15. The crypto market always witnesses huge volatility on options expiry.
Notably, 30,568 BTC options of notional value $2.09 billion are set to expire today. The put-call ratio is 0.79 and max pain point is $66,000, indicating a profit booking scenario for options traders while remaining bullish. BTC price fell to a low of $66,770 which is still higher than the max pain price. However, Bitcoin will witness a recovery due to buy-the-dip opportunity.
Meanwhile, 332,094 ETH options of notional value $1.24 billion are set to expire, with a put call ratio of 0.69. The max pain point is $3,550. Traders are particularly bullish on Ethereum but successfully booked profits above the max pain point. ETH price trading higher at $3,748 after dropping to a 24-hour low of 3,656.
2. Fading Fed Rate Cuts Hopes
The US Fed rate cuts will largely depend upon new economic data including inflation and jobs, US Federal Reserve Chair Jerome Powell cleared in his testimony to the Congress.
After hotter CPI data earlier this week, higher PPI, retail sales, and unemployment figures indicate higher inflation and resilience of the US economy. This gave the Fed more reasons to delay rate cuts to mostly the end of the year. The Fed is most likely to keep rates steady in March and May.
The CME FedWatch data shows a 54% probability of 25 bps rate cut in June and 47% odds of 25 bps rate cut in July. US stock market fell after the recent data, with US equity futures and global stock markets falling today amid market volatility and uncertainty.
US dollar index (DXY) rises to 103.40 from 102.85, first gain in four weeks. Moreover, the US 10-year Treasury yield rises fourth day in a row to 4.28%, its highest level since the start of the month after hot PPI data diminished optimism on potential Fed rate cuts this year. Fed swaps now signal less than three rate cuts this year.
3. Crypto Holdings Liquidated Amid Liquidity Flush
Crypto market saw over $680 billion in market value wiped in the recent liquidations amid liquidity flush. Coinglass data indicates over 192K traders liquidated in the last 24 hours with the largest single liquidation order of BTC-USDT swap valued at $13.30 million on crypto exchange OKX.
Nearly $543 million longs and $137 million shorts were liquidated, with Bitcoin and Ethereum witnessing over $242 million and $115 million liquidated. This caused the crypto market to bleed, but it also offered a buy-the-dip opportunity.
Popular analyst Michael van de Poppe predicted a short-term liquidity flush amid pre-Bitcoin halving rally. He added that lower timeframe bearish divergences seem to be valid and recommends buying altcoins dip.
4. Slow Bitcoin ETF Inflow
U.S. Spot Bitcoin ETF witnesses a substantial drop in inflows, falling by 80.6% to $133 million on Thursday, reported CoinGape. Notably, this marks the lowest inflow over the last eight trading days as Wall Street sentiment weakens amid the new economic data.
Investors took out holdings in Grayscale’s GBTC amid pre-halving top and taking cues from drop in gold and equity market. GBTC recorded an outflow of $257.1 million on Thursday.