The current bitcoin price movement is a confluence of factors including massive liquidations, macroeconomic pressures, and the impact of the negative Coinbase premium along with bitcoin ETF dynamics. These elements combined have caused a notable drop in the price of bitcoin.
#1 Long clearances
Today's bitcoin market experienced a significant price drop, initiated by a widespread liquidation event in the futures market. In the last 24 hours, cryptocurrency trader liquidations exceeded $682.54 million across more than 191,000 traders, according to Coinglass. data.
This increase in liquidations caused the price of bitcoin to fall 8% in just a few hours, going from $72,000 to $66,500. Although there was a minor recovery, with bitcoin price bouncing to the $68,000 level, it is currently almost 10% below its 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 of short positions accounted for the remaining $136.94 million, and long bitcoin positions alone accounted for $242.37 million in liquidations.
#2 Macro conditions that weigh on the price of bitcoin
The macroeconomic outlook 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 fixed, “If btc is digital gold, expect it to trade at the same rate as gold, but with a higher beta.” With the Federal Reserve meeting approaching next week, macroeconomic factors are expected to temporarily take center stage.
Yesterday's US Producer Price Index (PPI) data, which showed a 0.6% increase in February and beat forecasts of 0.3 month-over-month, has caused a domino effect: recently the CPI was also higher than expected, causing US bond yields to rise. The 10-year benchmark rate saw an increase of 10 basis points to 4.29%, while two-year rates rose to 4.69% from 4.63%. These developments have led traders to adjust their expectations for the Federal Reserve's interest rate policies in 2024.
Mohamed A. El-Erian, of Queens' College, the University of Cambridge, Allianz and Gramercy, commented on the situation: “US government bond yields rose today in reaction to another (slightly) higher-than-expected inflation figure (this time the PPI).” This suggests a growing awareness of the challenges persistent inflation poses to achieving the Federal Reserve's 2% inflation target.
#3 Negative Coinbase Premium/bitcoin ETF Quiet Day
bitcoin's drop below the $70,000 threshold is also attributed to “Coinbase Premium” – the exchange that custody the majority of all bitcoin spot ETFs – falling into negative territory for the first time since February 26, indicating a bearish sentiment in the US markets. This phenomenon is likely a consequence of significant sales in Grayscale GBTC, while the spot ETF saw relatively quiet activity.
After a record $1 billion net inflow to 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 recorded low inflows of $13.7 million and $3.5 million respectively, after a previously strong week. GBTC outflows were reported at $257.1 million, aligning with average levels.
crypto Analyst WhalePanda commented about the situation, noting that despite the reduced entry, “$132.7 million is still 2 full days of mining rewards.” He hints at a possible rally in the market, stating: “We are now in a range and overleveraged people are getting margin calls. I guess the next step is for next week.”
At the time of this publication, btc was trading at $67,916.
Featured image created with DALL·E, chart from TradingView.com
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