A significant downward trend hit the cryptocurrency market, with Bitcoin undergoing a substantial price drop. The fall in Bitcoin’s value triggered a domino effect that impacted various altcoins, including Ethereum, BNB, ADA, XRP, and AVAX. An array of elements, including mass liquidations and macroeconomic factors, alongside a downturn in the Coinbase premium and subdued activity in the Bitcoin ETF space, instigated this market shift.
Widespread Liquidations Shake the Market
The market witnessed a severe downturn primarily due to widespread liquidations. Data from Coinglass revealed that in a single day, liquidations affected over 245,000 investors, amounting to a staggering $812 million. The majority of this figure stemmed from liquidated long positions, with a notable 8% Bitcoin price drop within hours.
Following the price decline, Bitcoin momentarily recouped some losses, reaching $68,000 but remained roughly 10% lower than its peak value. Long position liquidations constituted 80% of the total, totaling upwards of $663 million, while short position liquidations accounted for the remaining $149 million.
Bitcoin Feels the Weight of Macroeconomic Trends
Macroeconomic indicators contributed to the market unease, with the U.S. Producer Price Index revealing a 0.6% hike, doubling the forecasted amount. This increase, along with a higher-than-anticipated Consumer Price Index, has led to a rise in U.S. bond yields. The resulting interest rate expectations have shifted investor outlook for upcoming Federal Reserve policies.
The heightened 10-year yield and a minor bump in the two-year yield reflect these macroeconomic changes, influencing investment strategies and market sentiment.
ETF Activity and Coinbase Premium Trends
Bitcoin’s decline below the $70,000 mark is also tied to a negative shift in the Coinbase premium, indicating bearish U.S. market trends. The Grayscale Bitcoin Trust (GBTC) experienced substantial sales, contrasting the relatively stable spot ETF market. Despite a previous surge in spot ETF interest, current activity has dwindled, with Blackrock leading the inflows and GBTC experiencing outflows consistent with average figures.
Cryptocurrency analyst WhalePanda pointed out that the decrease in inflows still represented a significant amount of the new Bitcoin supply from mining. Alongside Bitcoin’s decline, Ethereum and other major cryptocurrencies also saw their prices fall, with BNB, XRP, ADA, and AVAX all trading lower.