Bitcoin Price Decline: What Caused Today’s BTC Crash?

The cryptocurrency market is reeling after a sudden Bitcoin price slump of nearly 7%. Investors are scrambling to understand the forces driving this downturn, with several factors emerging as potential culprits.

FOMC Jitters Stall Bull Run

The market appears to be exercising caution ahead of the Federal Open Market Committee (FOMC) meeting. Recent inflation data, including higher-than-expected CPI and PPI figures, has dampened investor confidence.

Previously, many anticipated five rate cuts in 2024. However, the inflation data has forced a recalibration, with expectations now pointing towards just three cuts. The CME FedWatch Tool suggests a near-certain (99%) chance of unchanged interest rates tomorrow.

This cautious approach highlights the market’s sensitivity to central bank actions and their potential impact on asset prices, including Bitcoin.

Bitcoin ETF Outflows Raise Concerns

After a period of bullish momentum fueled by inflows into U.S. Spot Bitcoin ETFs, the tide turned on Monday. For the first time this month, outflows were recorded. Grayscale’s GBTC experienced its highest single-day outflow ever at $642.4 million, overshadowing BlackRock’s IBIT inflow of $451.5 million.

The overall U.S. Spot Bitcoin ETF outflows amounted to $154.3 million yesterday, further dampening market sentiment. Analysts point to this trend as a potential contributor to the recent Bitcoin crash, reflecting underlying market volatility.

Whale Sell-Off Sparks Fear, Uncertainty, and Doubt (FUD)

A significant Bitcoin whale on BitMEX triggered temporary price turbulence by offloading over 400 BTC, causing a brief plunge to $8,900. Although the market recovered quickly, the incident reignited concerns about profit-taking amid the ongoing bull run.

This episode underscores the inherent volatility of cryptocurrency markets and the cautious stance some investors adopt during price fluctuations.

Pre-Halving Retracement on the Horizon?

Crypto analyst Rekt Capital warns of a potential pre-halving retracement for Bitcoin, possibly occurring within the next two to four weeks leading up to the halving event. Historical data suggests similar patterns, with previous halvings witnessing significant drops (e.g., 38% in 2016 and 20% in 2020).

While past performance isn’t a guarantee of future results, investors are advised to brace for potential market volatility ahead of the upcoming halving.

Crypto Market Liquidations Add Fuel to the Fire

CoinGlass data reveals a staggering number of liquidations within the past 24 hours: 222,681 traders faced a total of $524.33 million in liquidations. Bitmex saw the largest single liquidation order at $9.01 million on XBTUSD.

Bitcoin took a significant hit, with liquidations reaching $130 million, primarily from long positions ($102 million) and short positions ($28 million). This massive liquidation wave has undoubtedly contributed to the recent Bitcoin crash, further reflecting the heightened volatility and uncertainty in the crypto space.

Bitcoin Futures Open Interest (OI) & RSI

According to CoinGlass data, Bitcoin Futures Open Interest (OI) declined slightly by 0.76% to 532.75K BTC (approximately $34.12 billion) within the last 24 hours. Specifically, CME Exchange witnessed a 4.53% decrease to 168.79K BTC ($10.78 billion), and Binance saw a 3.39% drop to 114.88K BTC ($7.36 billion).

Despite the drop in OI, Bitcoin’s Relative Strength Index (RSI) remains at 50, indicating a neutral market sentiment.

Key Takeaways and Support/Resistance Levels

Prominent crypto analyst Ali Martinez offers valuable insights in the wake of the crash. He highlights key support and resistance levels for Bitcoin price.

Martinez identifies crucial support thresholds at $61,100, $56,685, and $51,530. Conversely, critical resistance points are located at $66,990 and $72,880. This information provides valuable guidance for investors navigating the current market volatility.

Current Market Status

At the time of writing, Bitcoin is trading at $63,228.23, reflecting a 6.82% drop from yesterday. Trading volume has surged by 48% to $60.92 billion. Over the past 24 hours, the BTC price reached a high of $68,552.94, but it’s currently trading near its daily low.