Bitcoin Price Plummets 7% Amid Inflation Concerns, Yet Is a Rally Imminent?
Bitcoin (BTC) experienced a turbulent 24-hour period, with an 80.6% drop in Exchange-Traded Fund (ETF) inflows. The cryptocurrency’s price plummeted below $66,699, causing concern among investors. However, Bitcoin quickly rebounded above $67,730, maintaining its strong market position with a valuation of $1.322 trillion.
The drastic drop in Bitcoin’s price occurred during early Friday trading in Asia, reaching a low of $66,952 and representing a significant 7% decline. This sudden decrease wiped out over $100 million in Bitcoin long positions, erasing gains from its recent peak of $70,000.
The catalyst for this volatile ride was the release of the latest U.S. economic Consumer Price Index (CPI) data, which raised concerns about inflation and sparked speculation about the Federal Reserve’s monetary policies. There are now rumors of a potential interest rate hike, leading experts to anticipate higher interest rates for an extended period, putting downward pressure on Bitcoin’s price.
Bitcoin’s downward spiral mirrored losses in other assets like gold and the Nasdaq index. This trend was amplified when U.S. markets opened, coinciding with Bitcoin’s decline. Analysts predict that BTC could dip to the $60,000 mark, setting the stage for what some call the Halving Rally.
While some analysts view Bitcoin’s retreat as a natural correction after a rapid rise, others express concerns about market overheating and uncertainties surrounding the upcoming mining reward halving. Investor Adam Cochran sees opportunities amidst the chaos, highlighting potential profits from short-term leveraged positions.
Greta Yuan, Head of Research at VDX, suggests that Bitcoin’s recent surge may have outpaced the market’s ability to accurately price it, necessitating a correction. Similarly, Adrian Wang, Founder and CEO of Metalpha, speculates that the correction could be attributed to market adjustments ahead of the halving event.
Despite the turbulence, Singapore-based QCP Capital remains optimistic about Bitcoin’s long-term prospects. They believe that dips will be short-lived, emphasizing the continued strong demand for BTC spot ETFs. Additionally, they note significant interest in BTC calls predicting prices between $100,000 and $150,000 by year-end.
During the recent drop in Bitcoin’s price, the crypto community witnessed a massive liquidation event, resulting in $680 million in assets being wiped out. Long orders accounted for $545 million of the liquidated assets, while shorts contributed $134.6 million. Over 193,270 individuals were affected by this widespread liquidation, highlighting the inherent volatility of the crypto market. Notably, a significant $13.3 million liquidation order was recorded on the OKX – BTC – USDT – SWAP platform.
The roller coaster ride in the crypto world continues, with investors bracing themselves for more twists and turns.