The cryptocurrency market experienced a significant drop, causing the total market capitalization to fall by approximately 8%, down to $2.38 trillion. Consequently, there was a loss of around $250 billion in market value during this recent selling frenzy.
The price of Bitcoin dropped from $70,978 to $65,254 for several reasons. These included options expiry, historical Bitcoin trends following halving events, broader economic factors, and technical chart indicators signaling weakness. This selloff in Bitcoin led to a decline in Ethereum‘s price by 12%, causing altcoins such as Solana, XRP, Cardano, Dogecoin, Shiba Inu, and others to drop between 15% and 30%. Meme coins experienced significant selling pressure within the last 24 hours.
Crypto Market Selloff Started by Options Expiry and Extended by Other Factors
Before the U.S. CPI data release earlier this week, the crypto market exhibited early signs of instability. Bitcoin’s price surge to $72k was not a sustainable trend but rather a reaction to increasing inflows into Bitcoin ETFs and investors scrambling for long positions due to fear of missing out on Bitcoin’s upcoming halving event, as reported by CoinGape.
Experts including Benjamin Cowen, Peter Brandt, and Arthur Hayes have warned that if Bitcoin’s price follows a pattern similar to past Bitcoin halving events and the recent approval of spot Bitcoin ETFs, we could be in for a significant decline, even a market crash. According to Cowen, Bitcoin’s price may fall below $60,000 after the halving.
CoinGape anticipated a decline in Bitcoin and Ethereum prices following options expiry. The cryptocurrency market downturn commenced around 12 PM UTC during options expiry, as illustrated in the chart above. Several factors contributed to this trend, including lower than expected maximum pain points compared to current trading prices, an abundance of sell orders on derivatives, and muted investor sentiment following the release of a hotter Consumer Price Index (CPI).
The price of Bitcoin dipped below crucial support points at $70,400 and $68,200, causing a continued drop in value. This downturn was fueled by geopolitical conflicts in the Middle East and displeasing financial reports from leading banks, including JPMorgan Chase which experienced a 6.47% decrease on Friday.
The global economic situations led the US dollar index (DXY) to surge past 106, its peak since early November, while the US 10-year Treasury yield reached a 6-month high of 4.585%. In contrast, Bitcoin’s price dropped to $65k as these events occurred, leading to a significant decline in the cryptocurrency market.
Crypto Price Correction Not Over Yet
Approximately $950 million worth of cryptocurrency positions were terminated during the recent market downturn, according to Coinglass data. Out of this amount, over $830 million belonged to long position holders, while nearly $120 million was liquidated from short positions in the last 24 hours.
Approximately 297,000 traders saw their positions closed, with the largest individual liquidation taking place on OKX where someone converted Ethereum into US Dollars worth around $7.19 million.
QCP Capital remains structurally bullish but believes deleveraging dips can go deep, particularly due to the extent of the bull run this year. It suggests that traders looking to hedge short-term downside must consider BTC price at the May 31 expiry.
Markus Thielen, the CEO of 10x Research, expresses that Bitcoin miners might dispose of approximately $5 billion in Bitcoin following the halving occasion, and it’s likely that large investors, or “whales,” will initiate these sales.
The cost of Bitcoin is presently at $67,211, and there’s ongoing selling pressure if the price cannot surpass the support level and climb above its 20-day moving average. On the other hand, Ethereum’s price stands at $3,252 as of now.
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2024-04-13 11:36