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What is the reason behind the sharp drop in Bitcoin price today?
Bitcoin price is struggling to maintain bullish momentum amid tightening economic conditions in the United States. The latest inflation data has become the main reason for the sharp drop in BTC prices from $63,446 to $60,763 in just a few hours. Additionally, Spot Bitcoin ETFs in the US experienced major outflows on Friday, May 10, with GBTC accounting for a negative flow of over $100 million.
University of Michigan consumer confidence data showed a decline from 77.2 in April to 67.4 in May, the lowest in six months and also missed market expectations of 76. Furthermore, inflation expectations for the year ahead rise to 3.5 %, a six-month high from 3.2% in April. Also the five-year inflation outlook it hit 3.1% from 3.0%.
Meanwhile, new comments from Fed officials were cautious. Lorie Logan, nurse said there are important upside risks to inflation. It is too early to consider a rate cut. We must be flexible in our policies. Federal Reserve Governor Bowman he said that we need to maintain political stability for a longer period of time.
BTC price on a 1 hour time frame. Source: TradingView
The cryptocurrency market saw the liquidation of over $50 million in just a few hours
BTC price it fell more than 4% in a few hours to an intraday low of $60,690. Bitcoin fell from a high of $63,446 as it failed to sustain bullish momentum following the recent breakout. Ethereum and other altcoins also fell 2-4%. The recent decline has raised doubts about whether the cryptocurrency market will recover later this year.
Coinglass data shows that more than $150 million has been liquidated in the cryptocurrency market in the last 24 hours. Among these, long positions for 90 million dollars and short positions for almost 60 million dollars were liquidated. The majority of the liquidation occurred within an hour, recording a value of more than $51 million.
Over 54,000 traders were liquidated and the largest single liquidation order occurred on cryptocurrency exchange Binance when someone sold $3.56 million worth of BTC to USDT.
Bloomberg’s senior commodities strategist Mike McGlone said: “Highly volatile and speculative, the 24/7 traded cryptocurrency was up against gold the last time the S&P 500 e-mini future broke above its 50 moving average weeks into November, but this time the Bitcoin/gold cross is falling.”
The new inflation data caused US dollar index (DXY) to rise to 105.40 and the 10-year US Treasury bond yield it jumped 0.055% to 4.504%. Since Bitcoin moves opposite to DXY and Treasury yields, a rise in both caused Bitcoin’s price to plummet to $60,000, triggering a cryptocurrency market sell-off.
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