Bitcoin (BTC) Price Plunges by 7% Following All-Time High; What Caused the Drop?

Bitcoin (BTC) enthusiasts have emerged victorious in recent weeks, sparking hope for a potential super cycle. Despite high volatility since the start of the year, cash inflow into Bitcoin investment products has remained strong. CoinShares’ weekly data analysis reveals that Bitcoin attracted $1.72 billion in cash inflow last week, accounting for 94% of all crypto investment product inflows.

However, altcoins with strong fundamentals like Optimism (OP) have gained favor in the crypto cash rotation and are now entering the price discovery phase.
In the past 24 hours leading up to Tuesday’s early New York session, over $675 million was liquidated from the crypto derivatives market, according to Coinglass market data. The heavy liquidations followed Bitcoin’s recent rally towards its all-time high (ATH), marking the first time this has happened before a halving event.
The rise of meme coins like Dogecoin (DOGE), Shiba Inu (SHIB), Pepe (PEPE), FLOKI, and dogwifhat (WIF) has indicated a potential end to the short-term bullish outlook. Consequently, Bitcoin’s price may lead to a short-term correction in the altcoin market in the coming weeks before the halving event takes effect.
Technical analysis suggests bearish pressure on Bitcoin. The TD Sequential indicator has issued a sell signal on the daily chart, which requires close attention. This indicator has a strong track record in predicting Bitcoin trends since the beginning of the year. It previously signaled a buy in early January, preceding a 34% surge.
Although short-term sentiment on Bitcoin is divided among long and short traders, several technical indicators point to a possible reversal in the days ahead. The TD Sequential indicator, combined with bearish divergence in the 1-hour Relative Strength Index (RSI), suggests that Bitcoin may experience choppy trading in the near future.
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Price Analysis