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Why is Bitcoin price falling today? 3 main reasons
Today’s Bitcoin price movement is a confluence of factors including massive liquidations, macroeconomic pressures, and the negative impact of Coinbase Premium along with Bitcoin ETF dynamics. These elements combined led to a notable drop in the price of Bitcoin.
#1 Long settlements
Today’s Bitcoin market saw a significant price decline, initiated by a large liquidation event on the futures market. According to Coinglass, in the last 24 hours, cryptocurrency trader liquidations exceeded $682.54 million by more than 191,000 traders data.
This wave of liquidations led the price of Bitcoin to collapse by 8% in a few hours, from $72,000 to $66,500. While there has been a slight recovery, with Bitcoin’s price rebounding to the $68,000 level, it currently sits nearly 10% below its March 14 all-time high of $73,737.
A notable 80% of these liquidations were long positions, contributing $544.99 million of the total. Short position liquidations made up the remaining $136.94 million, with Bitcoin longs alone accounting for $242.37 million in liquidations.
#2 Macroeconomic conditions that weigh on the price of Bitcoin
The macroeconomic landscape has put further pressure on the value of Bitcoin. Ted, a macro analyst known as @tedtalksmacro, highlighted on X the influence of macro conditions on the cryptocurrency market.
He declared, “If BTC is digital gold, expect it to trade in lockstep with gold, however, with a higher beta.” With the Federal Reserve meeting looming next week, macroeconomic factors are expected to temporarily take center stage.
Yesterday’s US Producer Price Index (PPI) data, which showed a 0.6% increase in February and beat forecasts by 0.3 month on month, caused a ripple effect with an index consumer prices recently hotter than expected, leading to a rise in US bond yields. The 10-year benchmark rate saw a 10 basis point increase to 4.29%, while two-year rates rose to 4.69% from 4.63%. These developments have led traders to adjust their expectations for the Federal Reserve’s interest rate policies in 2024.
Mohamed A. El-Erian, Queens’ College, University of Cambridge, Allianz and Gramercy, he noted on the situation: “US government bond yields rose today in reaction to another (slightly) warmer-than-expected inflation data (this time PPI).” This suggests a growing awareness of the challenges that persistent inflation poses to achieving the Fed’s 2% inflation target.
#3 Coinbase Premium/Silent Bitcoin ETF Down Day
Bitcoin’s drop below the $70,000 threshold is also attributed to this “Coinbase Premium” – the exchange that holds the majority of all spot Bitcoin ETFs – fell into negative territory for the first time since February 26, indicating bearish sentiment from US markets. This phenomenon is probably a consequence of the significant sales of GBTC in grayscalewhile the spot ETF saw relatively calm activity.
After a record net inflow of $1 billion for the spot ETF on March 12, inflows recently fell to just $132.7 million, with Black rock making the lion’s share with $345.4 million. Meanwhile, Fidelity and ARK reported low inflows of $13.7 million and $3.5 million, respectively, following a previously strong week. GBTC outflows were reported at $257.1 million, in line with average levels.
WhalePanda Crypto Analyst commented on the situation, pointing out that despite the reduced inflow, “$132.7 million is still equivalent to 2 full days of mining rewards.” He hints at a potential market rebound, saying: “We’re just floating around now and overleveraged people are getting margin calls. I guess the next step forward is next week.
At the time of writing, BTC was trading at $67,916.
Featured image created with DALL·E, chart from TradingView.com