Bitcoin's Infamous Volatility Continues Despite Record-High Rally Influenced by Institutional Investment Boom
Summary:
Today's steep 7% drop in Bitcoin prices followed a surge to an all-time high of $69,324 on the Coinbase exchange. The fluctuation is largely attributed to profit-taking and futures market liquidations. Extreme investor greed, amplified by spot BTC ETFs, has driven significant institutional investment into Bitcoin, reaching a yearly total of $7.3 billion out of $7.6 billion invested in crypto. Despite this, Bitcoin’s price remains volatile with a striking increase in open interest and a surge in Bitcoin futures market liquidations. As Bitcoin continues to veer on the path of volatility, investors are advised to conduct due diligence before making any decisions.
Today's rollercoaster of volatility in Bitcoin (BTC) pricing underscores the risk and reward, as it offset a 7% tumble with an unprecedented high of $69.324 on Coinbase exchange. It's been enjoying the ride of hefty inflows into spot BTC ETFs and a surge of investor attention in the cryptocurrency market. However, experts advise that today's dip is likely due to a composite of profit grabbing and futures market liquidation.
A deeper insight into today's Bitcoin price fluctuations reveal how ETFs provide opportunities for significant investments from institutional players. The recent record-breaking rally in Bitcoin price owes a lot to institutional investors investing in approved spot BTC ETFs. Institutional investment data from CoinShares reveals a whopping $7.6 billion investment in crypto in 2024, with more than $1.8 billion coming just in the past week.
A significant portion of the total investment in crypto in 2024, $7.3 billion, was directed specifically towards Bitcoin. Bitcoin's total assets under management (AUM) far outshine other digital assets, standing tall at $62.71 billion.
As Bitcoin recorded an all-time high, investor sentiment soared towards "extreme greed," as defined by the Crypto Fear and Greed index. March 5 saw this level of greed peak at 90, a height not seen since February 2021.
Nevertheless, Bitcoin's price continues to swing wildly, with a stark increase in open interest. A sudden surge in Bitcoin futures market is quite evident from the liquidation reports. A surge in long liquidations amid high volatility led to a steep fall in Bitcoin prices. On March 5 itself, Bitcoin long positions suffered a loss of over $111 million. The storm of liquidations on the day Bitcoin's price reached its milestone high reached a staggering $35 million within just one hour.
The market swings are a fresh occurrence for the newer participants in the market, claim some experts. For a fleeting period on March 5, all on-chain Bitcoin addresses recorded profits which hasn't been witnessed since the last high. With no Bitcoin addresses currently reporting a loss, investors have begun turning profits. March 5 saw the year's second-highest profit realization, surpassing the $3 billion mark.
The instability in Bitcoin's price today is fueled by a perfect storm of massive liquidations, profiteering, and continued institutional investment - serving as a stark reminder that every investment move comes with its own risks and rewards. Hence, investors are advised to exercise caution and conduct thorough research before diving into the decision-making process.
Published At
3/5/2024 9:23:53 PM
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