Why Bitcoin Price is falling down ?

By Raghav
Sawhney

A
notable
downturn
in
Bitcoin’s
(BTC)
value,
which
briefly
dipped
below
the
$64,000
mark,
resulted
in
substantial
financial
repercussions
for
investors
speculating
on
an
increase
in
its
price.
This
downturn
triggered
over
$440
million
in
liquidations
among
crypto
futures
traders.
Within
this
context,
some
investors
are
now
adjusting
their
expectations,
predicting
that
Bitcoin
might
further
decrease
to
the
$55,000
range
in
the
near
term.

Specifically
focusing
on
those
who
placed
long
bets
on
Bitcoin,
these
individuals
faced
significant
losses
totaling
$130
million.
Moreover,
other
major
cryptocurrencies
were
not
spared
from
this
downturn.
Ethereum
(ETH),
Solana
(SOL),
and
Dogecoin
(DOGE)
collectively
accounted
for
$120
million
in
long
position
liquidations,
according
to
information
provided
by
Coinglass.

Analyzing
the
distribution
of
these
liquidations
across
trading
platforms,
Binance
emerged
as
the
most
impacted,
with
liquidations
on
the
exchange
reaching
$212
million.
Following
closely,
OKX
experienced
$170
million
in
liquidations,
underscoring
the
widespread
effect
of
the
market
movement
on
traders
across
different
platforms.
Liquidations,
a
process
where
exchanges
forcibly
close
a
trader’s
leveraged
position
due
to
the
loss
of
the
initial
margin,
have
been
a
contributing
factor
to
this
downturn.
These
actions
are
typically
taken
when
traders
fail
to
meet
the
required
margin
for
keeping
their
leveraged
positions
open,
essentially
not
having
enough
capital
to
maintain
the
trade.

In
the
past
day,
significant
cryptocurrencies
have
seen
a
sharp
decline,
with
some
tokens
experiencing
a
drop
of
up
to
11%,
according
to
CoinGecko’s
data.
Specifically,
Ethereum
(ETH),
Solana
(SOL),
and
Cardano’s
ADA
witnessed
a
decrease
of
up
to
8%.
The
CoinDesk
20,
which
tracks
the
performance
of
various
major
cryptocurrencies
excluding
stablecoins,
also
recorded
an
8%
fall.

Amid
these
market
conditions,
some
traders
have
voiced
their
expectations
for
Bitcoin
to
potentially
drop
to
around
$55,000
in
the
forthcoming
weeks,
despite
maintaining
an
optimistic
perspective
for
the
long
term.

In
terms
of
individual
cryptocurrency
performance
beyond
Bitcoin,
Ether
(ETH)—the
crypto
with
the
second-largest
market
capitalization—has
declined
by
8%,
falling
to
$3,250.
This
is
a
notable
decrease
from
its
trading
price
above
$4,000
just
last
week.
Altcoins,
or
smaller
cryptocurrencies,
have
similarly
faced
downturns,
with
Cardano
(ADA)
dropping
6%
and
Polygon
experiencing
a
9%
decrease.
The
downturn
was
not
limited
to
these
larger
tokens;
meme-inspired
cryptocurrencies
also
saw
declines,
with
Dogecoin
(DOGE)
falling
by
9%
and
Shiba
Inu
(SHIB)
losing
7%
of
its
value.

Bitcoin’s
value
began
to
decline
during
the
late
hours
of
Monday
in
the
U.S.,
driven
by
a
significant
spike
in
withdrawals
from
Grayscale’s
Bitcoin
Trust
(GBTC),
which
reached
a
record
high
of
over
$640
million.
While
there
were
incoming
funds
to
other
financial
products
amounting
to
just
below
$500
million,
the
overall
market
experienced
a
net
loss
of
$150
million
that
day.

Bitcoin
ETF
Flow
Table(US$m)

Currently,
Bitcoin
(BTC)
has
seen
a
4%
decrease
in
its
value
and
is
now
trading
above
$65,000.
This
downturn
coincides
with
the
sale
of
GBTC
shares
reaching
unprecedented
levels.

Research
from
BitMEX
indicates
that
the
outflows
from
GBTC
were
notably
high
on
March
18,
totaling
$643
million.
Further
analysis
from
the
investment
firm
Farside
revealed
a
net
withdrawal
from
bitcoin
ETFs
overall,
amounting
to
$154
million.
Among
these
ETFs,
the
iShares
bitcoin
ETF
(IBIT)
recorded
the
highest
inflow
of
$451.5
million,
with
other
products
collectively
receiving
around
$36.7
million.

Analysts
from
Bespoke
Investment
Group
highlighted
a
significant
event
where,
on
BitMex,
Bitcoin’s
price
plummeted
to
$8,900
overnight.
This
drop
was
triggered
by
a
large
volume
of
sell
orders
amounting
to
$55.5
million.
Considering
Bitcoin’s
market
capitalization
surpasses
$1
trillion,
the
analysts
pointed
out
that
such
a
substantial
price
movement
caused
by
a
relatively
small
sell
order
raises
concerns
about
the
market’s
liquidity.

Despite
this
incident,
the
sentiment
among
many
in
the
market
regarding
Bitcoin’s
future
prospects
remains
positive.
A
key
factor
contributing
to
this
optimism
is
the
recent
approval
of
spot
Bitcoin
Exchange-Traded
Funds
(ETFs)
by
U.S.
regulatory
bodies
in
January.
This
approval
has
sparked
a
renewed
interest
in
cryptocurrencies,
attracting
more
investments.
According
to
CoinShares,
digital
asset
investment
products
witnessed
a
record
inflow
of
$2.9
billion
in
the
last
week
alone,
bringing
the
total
for
the
year
to
$13.2
billion.

Since
the
introduction
of
bitcoin
exchange-traded
funds
(ETFs)
earlier
in
the
year,
GBTC,
which
has
recently
transitioned
into
an
ETF,
has
witnessed
significant
withdrawals.
This
trend
is
largely
attributed
to
its
relatively
high
fees,
contributing
to
downward
pressure
on
bitcoin’s
price.

As
per
market
sentiment
it
is
evident
that
another
source
of
selling
pressure
on
bitcoin
comes
from
short-term
holders
who
are
capitalizing
on
the
recent
price
increases
to
secure
profits.

The
on-chain
analytics
company
shared
a
chart
illustrating
the
short-term
holder
SOPR
ratio
for
Bitcoin
(BTC),
indicating
a
significant
uptick
in
profit-taking
among
investors
who
have
held
BTC
for
less
than
five
months.
This
movement
is
described
as
a
notable
event
by
CryptoQuant,
occurring
only
every
few
years.
However,
it
is
cautioned
that
this
alone
isn’t
a
reliable
signal
indicating
the
peak
of
a
bull
market.
This
perspective
is
influenced
by
factors
such
as
the
growing
participation
of
institutional
and
individual
investors
in
Bitcoin,
particularly
through
the
introduction
of
spot
ETFs.

The
current
price
movements
suggest
a
short-term
correction
within
the
cryptocurrency
market,
although
it’s
not
insignificant.
Profit-taking
by
long-term
holders
could
be
contributing
to
this
downward
trend.
Variable
liquidity
across
different
trading
platforms
is
also
playing
a
role
in
injecting
volatility
into
Bitcoin.
There
have
been
instances
of
flash
crashes,
where
the
price
of
an
asset
briefly
plunges
well
below
its
usual
market
value.
These
flash
crashes
are
typically
caused
by
automated
trading
algorithms,
liquidity
mismatches,
or
an
imbalance
between
buyers
and
sellers.





Liquidity
plays
a
vital
role
in
markets,
allowing
assets
to
be
swiftly
bought
and
sold
without
causing
significant
price
fluctuations.
Following
the
collapse
of
the
FTX
exchange
in
late
2022,
crypto
liquidity
experienced
a
severe
decline.
However,
the
recent
surge
in
digital
asset
prices
has
helped
restore
Bitcoin’s
market
depth,
a
crucial
indicator
of
liquidity,
back
to
its
levels
before
the
FTX
incident,
as
noted
by
analysts
from
the
crypto
data
provider
Kaiko
in
a
report
on
Monday.

Despite
this
improvement,
it’s
important
to
recognize
that
not
all
trading
platforms
offer
the
same
level
of
liquidity.
Variations
in
liquidity
across
markets
are
evident,
especially
during
a
period
of
notable
changes
for
Bitcoin,
notably
with
the
introduction
of
new
spot
Bitcoin
exchange-traded
funds
(ETFs).
These
differences
in
liquidity
may
contribute
to
volatile
trading
conditions
and
could
potentially
lead
to
more
sudden
price
crashes
if
Bitcoin
experiences
further
selling
pressure.

Additionally,
Bitcoin
is
on
the
cusp
of
a
significant
event
known
as
the

halving,
expected
to
occur
next
month.
This
event
will
reduce
the
number
of
new
tokens
being
created
and
released
into
the
market,
effectively
tightening
the
supply
at
a
time
when
demand
for
Bitcoin
has
been
on
the
rise.
This
supply
squeeze
is
anticipated
to
provide
further
support
to

Bitcoin’s
price
levels.

Raghav
Sawhney

Raghav
is
a
significant
contributer
who
uses
his
knowledge,
skills
and
experience
towards
development
&
growth
of
the
organisation
in
an
efficient
and
effective
manner.