Top 3 Reasons Why Bitcoin (BTC) Price Dropped Below $66K

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The recent flash crash of Bitcoin and its enormous liquidations has shocked many investors, prompting questions about the underlying causes. So what are the reasons for the sudden downturn? 

Below are the three key factors that are the driving force behind Bitcoin’s price dropping by over 5%. 

High Funding and Open Interest

The first thing is funding and open interest levels in the Bitcoin ecosystem. When the financing metrics and open interest are high, it indicates a proliferation of leveraged positions, which leaves Bitcoin vulnerable to price manipulation. Whales or large holders of Bitcoin might take advantage of this situation to trigger a price drop by selling off their holdings.

Whale action has subsequently led to Bitcoin’s entire network witnessing a total liquidation of $157 million in the past hour alone, with long orders totaling $144 million.

Grayscale Outflow

The second reason is the Grayscale Bitcoin Trust (GBTC) outflows. GBTC, a popular investment vehicle for institutional investors to invest in Bitcoin ETFs, has decreased in demand. These massive GBTC outflows might contribute to a drop in Bitcoin’s price, now trading at around $66,608. Ethereum has also experienced a notable decline, briefly falling to $3,319 before stabilizing. The sharp decline in prices resulted in widespread liquidations across the crypto market. 

Historical Precedent

Thirdly, Bitcoin’s historical patterns, particularly its tendency to experience price corrections before halving events. Bitcoin’s halving, which occurs approximately every four years, is due this month, on April 18th! 

The recent drop in Bitcoin’s price combines three factors: high leverage in the market, institutional outflows, and historical patterns related to halving events. #binance #btc #bitcoin $BTC