Bitcoin (BTC) Price Drops 7% Following Surging to $63.9K, Its Highest in the Year
Bitcoin, the reigning champion of all cryptocurrencies, took investors on a thrilling rollercoaster ride on Wednesday. After soaring to an impressive peak of $64,000, it suddenly plummeted by 7%, leaving traders in a state of turbulence.
The Rise – Factors Driving Bitcoin’s Surge
Bitcoin’s remarkable ascent to heights unseen in over two years can be attributed to a combination of factors. One significant factor was the staggering 42% price surge in February, which marked its largest monthly increase since December 2020. This surge played a crucial role in driving Bitcoin’s surge on Wednesday.
Another noteworthy factor contributing to Bitcoin’s rise was the approval of U.S. spot Bitcoin ETFs. This approval attracted a significant influx of capital into the market, with Grayscale, Fidelity, and BlackRock’s ETFs experiencing a surge in trading volumes. This signaled a growing interest in cryptocurrencies as a formidable asset class.
Additionally, the impending April halving of Bitcoin, followed by a post-halving correction, along with the anticipated U.S. Fed rate cuts in the coming months, all played a role in the increased surge that propelled Bitcoin to reach $64,000.
The Fall – Factors Behind Bitcoin’s 7% Plunge
Unfortunately, the euphoria surrounding Bitcoin’s rise was short-lived, as it faced an unexpected 7% plunge caused by multiple factors. The past 24 hours saw a staggering $700 million in losses for all digital assets, highlighting the bloodbath experienced by leveraged traders.
The market turmoil extended beyond Bitcoin, affecting various digital assets. The CoinDesk 20 Index, which represents a broader market sentiment, experienced a nearly 5% drop after hitting an all-time high earlier in the day. Major cryptocurrencies like ETH, Solana’s SOL, XRP, Cardano’s ADA, DOGE, and Avalanche’s AVAX followed suit, dropping by 4% to 9% within an hour.
One significant contributor to this sell-off was the culmination of $700 million in liquidations across all digital assets within 24 hours. This massive liquidation led to the closure of leveraged derivatives trading positions, impacting both long and short position trades. The scale of liquidations witnessed on this day was comparable to the major wipe-out in August when Bitcoin’s sudden drop to $25,000 liquidated $1 billion in derivatives positions across the crypto landscape.
Interestingly, this wild price action also set records for trading volumes in U.S.-listed spot Bitcoin ETFs. BlackRock’s IBIT alone saw a staggering $3.3 billion in shares traded, more than double the previous day’s record-breaking figures. Collectively, spot ETFs recorded close to $8 billion in trading volume, further highlighting the heightened volatility and investor activity during this period.