Bitcoin Plummets Below $65,000, Triggering Mass Liquidation and Reviving Dormant Supply
Summary:
Bitcoin's (BTC) price dropped over 7.1%, going below $65,000 for the first time since March 24. Historically, the 14th week of the year has seen Bitcoin's value dip. Coinglass data indicates that fall could trigger over $249 million worth of liquidations. The sell-off is largely attributed to new investors, who entered the Bitcoin market following the approval of US spot ETFs. Over $152.5 million worth of leveraged Bitcoin positions were liquidated in the past 24 hours, sparking an additional $165 million in liquidations on Tuesday morning. The dormant Bitcoin supply seems to be circulating again, marking a change in market dynamics.
Bitcoin's (BTC) value experienced a decline of 7.1% in the past day, falling beneath the $65,000 threshold for the first time since March 24. Historically, the 14th week of the calendar year has been a particularly weak period for Bitcoin's value. Backed by data from Coinglass, it's seen that Bitcoin's price has averaged a dip of 8.33% during the 14th week in past years. For Bitcoin's price to remain steady, it must maintain a value above $65,000.
The price of Bitcoin experienced a fall of over 6% in a 24-hour period, plunging to a daily low of $64,610 at 1:35 pm (UTC). Despite this, the total trade volume for the digital asset surged over 75%, reaching $46 billion, as seen from CoinMarketCap data.
Crypto analyst Rekt Capital postulated that the momentum of Bitcoin's price is expected to slow down as the date of the Bitcoin halving approaches. He noted the cryptocurrency's inability to successfully retest its post-breakout levels. Yet there are still chances for Bitcoin to recover to its previous all-time high of around $69,000 before the close of the new weekly trading cycle.
For future losses to be negated, Rekt Capital emphasized that Bitcoin's price should remain above the weekly low of $65,600. Coinglass data reveals that falling to the $65,000 price point would trigger the liquidation of long leveraged positions worth over $249 million across all trading platforms.
Following this downturn, Bitcoin recalibrated several important metrics earlier indicating that the price was inflated. This includes the relative strength index (RSI), which dropped to 48 on the daily timeframe indicative that the currency isn't overbought anymore.
According to Andrey Stoychev, the head of Prime Brokerage at Nexo, the primary reason for the price slump can be attributed to beginners who started investing in Bitcoin following the approval of the US spot Bitcoin exchange-traded funds (ETFs). These new investors saw an over 50% return in a span of two months, triggering a profit-taking impulse.
Bitcoin's price correction isn't alarming for Stoychev, who welcomes it as part of the expected fluctuations in every market. He predicts a short-term correction due to the influx of new investors keen on Bitcoin investing.
For the traders, the price point to keep a keen eye on should be $64,000, where over $17.21 million in Bitcoin futures leveraged positions at Binance - the globe's biggest exchange - can be liquidated. In addition, $9.92 million worth of BTC can be liquidated at the $63,500 price point.
Over the past day, more than $152.5 million worth of leveraged Bitcoin positions were liquidated, including $109.11 million worth of long positions. Bitcoin's sudden pullback prompted over $165 million in leveraged crypto liquidations in a time frame of less than two hours on Tuesday morning.
Meanwhile, the dormant Bitcoin supply seems to be circulating again. The Long-term holder (LTH) supply has reduced by 900,000 BTC from its peak value of 14.91 million BTC in December 2023, with Grayscale contributing about a third (286,000 BTC) to it. Long and short-term holder data signals that the market's selling pressure is being counteracted by the intrusion of fresh capital into the Bitcoin market, with more crypto being acquired from exchanges.
Published At
4/2/2024 7:06:53 PM
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