The cryptocurrency market has experienced a significant decline, leading to a drop of more than 10% for Bitcoin and most altcoins in the past 24 hours.
Market analysts have attributed this sharp downturn to several factors, including the diminishing rate cut by the Federal Reserve, recent crypto liquidation, a substantial decrease in spot Bitcoin ETF inflows, and the expiration of Bitcoin and Ethereum options today.
Today (Friday), the crypto market is witnessing a dramatic downturn, with prices plunging sharply after reaching unprecedented highs. At the time of reporting, Bitcoin (BTC) has undergone a stark reversal, falling by 7.5% and trading at $67,876. Ethereum has also declined by 7%, while other altcoins like Dogecoin (DOT), Toncoin (TON), and Shiba Inu (SHIB) have experienced drops of over 10% within just 24 hours.
Interestingly, this pullback aligns with a recent prediction by digital asset analytics firm Swissblock, which suggested that Bitcoin could drop to $58,000-$59,000. Swissblock believes that this cool-off is imminent, considering that the asset has doubled in value from $38,000 without experiencing any significant pullback. Crypto investment services firm Matrixport has also forecasted this consolidation. However, analysts speculate that the halving event could be a critical catalyst for pushing prices above their all-time highs. As projected by Samson Mow and reported by Crypto News Flash, Bitcoin could reach $1 million either this year or next year.
Although this bull market still shows potential, the declining RSI (Relative Strength Index) in contrast to the still-high Bitcoin prices could indicate that BTC needs to consolidate before experiencing another rally.
To understand the underlying factors contributing to this widespread market pullback, analysts have identified four main reasons:
1. The fading Federal Reserve rate cut: Rate cuts typically rely on new economic data, such as inflation and job numbers. According to CME FedWatch data, there is a 54% chance of a 25 bps rate cut in June and a 50% chance in July. In response, US equity futures and the global stock market have experienced declines.
2. Crypto holdings liquidity: The recent liquidation has resulted in $680 billion being flushed out of the market. Coinglass data reveals that over 192,000 traders were liquidated in the past 24 hours. One notable liquidation order was a BTC-USDT swap valued at $13.30 million on the OKX exchange. It is also reported that approximately $543 million in long positions and $137 million in short positions were liquidated. Bitcoin and Ethereum saw liquidations of $242 million and $115 million, respectively. Analyst Michael van de Poppe predicted earlier that short-term liquidation would occur in the pre-halving phase.
3. Drop in US Bitcoin spot ETF inflow: The US Bitcoin spot ETF experienced an 80.6% decline in inflow, totaling $133 million. Against this backdrop, an analyst speculates that there could be a significant capital inflow.
4. Bitcoin and Ethereum options expiry: The market pullback is also a response to the expiration of over $3 billion in Bitcoin and Ethereum options today (March 15). The report states that 30,568 BTC options with a notional value of $2.09 billion are expected to expire, with a put-call ratio of 0.79 and a max pain point of $66,000. Additionally, 332,094 ETH options with a notional value of $1.24 billion are set to expire, with a put-call ratio of 0.69 and a max pain point of $3,550. Data indicates that traders have booked profits above the max pain point but remain bullish on Ethereum.
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