In the last 24 hours, the price of Bitcoin has undergone a major correction, dropping 7.5%. The world’s largest cryptocurrency reached a high of over $73,500 on March 24, but the price has since fallen to below $67,400. What causes this striking price drop?
Liquidation wave in the crypto market
It is not unusual in the crypto market for corrections to occur. Bitcoin has risen significantly in value in the past few months. The project managed to increase in price by 60% in three months. As the market turns bullish, more and more traders are placing risky trades with leverage. When the price drops, these trades can be liquidated, which means that the trader’s position is automatically sold because the BTC price drops below a certain level.
The liquidation of Bitcoins causes a further drop in the price, which can trigger more liquidations. The result is a strong price crash. More than $680 million in liquidations have occurred in the past 24 hours, with about $545 million of that being long positions and $136 million being short positions, according to Coinglass data.
Bitcoin ETF inflows disappointing
An additional cause of the recent price decline is yesterday’s disappointing inflow into Bitcoin ETFs. We have become accustomed to an increasing amount of capital flowing into popular Bitcoin Spot Exchange Traded Funds (ETFs) in recent weeks. The ETFs reached a new record time and time again, but that ended yesterday.
Yesterday’s inflow was 80% lower than the day before, which is worrying news for the market.
Influence of macroeconomic factors on the Bitcoin price
Finally, macroeconomic conditions are a major reason for Bitcoin’s recent price drop. These circumstances have a significant impact on the value of Bitcoin. A meeting of the Federal Reserve (Fed) is scheduled for next week, during which interest rates will be discussed, among other things. Investors are anticipating a possible interest rate cut, which could positively impact both stock and crypto prices by making it easier to borrow money.
Recent data on the Consumer Price Index (CPI), which provides insight into inflation, was higher than expected. This tempers expectations that interest rates will fall. A lower chance of interest rate cuts could lead to less investment in the crypto market, limiting the prospects for the Bitcoin price.
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Source: https://newsbit.nl/waarom-daalt-de-bitcoin-koers-vandaag-3/
