Bitcoin dipped to $62,483 on Tuesday morning, a drop of over 14% since its all-time high last week, before hovering just below $63,000, according to CoinGecko data.
Bitcoin began sliding Monday evening due to record outflows from Grayscale’s GBTC of over $640 million, according to Bloomberg data. Meanwhile, inflows to the other nine spot Bitcoin ETFs were just under $500 million, leaving the market with a net outflow of $15 million on Monday.
We've got a negative flow day for the Cointucky Derby #Bitcoin ETFs thanks to $GBTC's $643 million outflow day pic.twitter.com/scmVgmwtiH
— James Seyffart (@JSeyff) March 19, 2024
The drop has had a ripple effect across cryptocurrencies, with major coins like Ether and Solana dropping 8.1% and 12.5% in the past 24 hours, respectively. Meanwhile, memecoins have also suffered over the past week, with FLOKI, Bonk, and Dogecoin down 34%, 28.5%, and 24.8% respectively.
In addition to ETF outflows, the Federal Open Market Committee is due to meet this week, which has subdued the market as investors seem to be trading cautiously as they wait to hear whether interest rates are changed. The recent higher-than-expected inflation data, including the U.S. Consumer Price Index and Producer Price Index, has diminished expectations of interest rate cuts, with the CME FedWatch Tool predicting a 99% likelihood of rates not changing.
Additionally, the Bank of the Japan today increased its key interest rate from -0.1% to a range of 0% to 0.1% to help tackle soaring consumer prices. It’s the first such increase from the central bank in 17 years.
The fall in crypto prices caused over $440 million in liquidation for traders of crypto futures who were betting on higher prices, according to Coinglass data, which has contributed to the recent price crash. The majority of liquidations took place on Binance, at $212 million, followed by OKX, at $170 million. Liquidations happen when an exchange closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin. This occurs when a trader can’t meet the margin requirements for a leveraged position. In other words, they don’t have sufficient funds to keep the trade open.
Another factor behind the dip could also be a pre-halving retracement. Analyst firm Rekt Capital told CoinGape Media yesterday about the risk of an imminent pre-halving price drop for Bitcoin, likely occurring two to four weeks before the anticipated halving on April 19. Historical data suggests a similar trend, with a 38% drop before the 2016 halving, and a 20% decline in 2020.
