Bitcoin’s (BTC) Price Plunges Below $66K: Unveiling the Top 3 Causes

Bitcoin’s recent flash crash and the resulting liquidations have come as a shock to many investors, leading to questions about the underlying causes. But what are the reasons behind this sudden downturn?

Here are the three main factors driving Bitcoin’s price drop of over 5%.

1. High Funding and Open Interest
One contributing factor is the high levels of funding and open interest in the Bitcoin ecosystem. When these metrics are elevated, it indicates an abundance of leveraged positions, making Bitcoin susceptible to price manipulation. Large holders of Bitcoin, known as whales, may exploit this situation by selling off their holdings and triggering a price decline.

As a result, the entire Bitcoin network has witnessed a staggering $157 million liquidation in just the past hour, with long orders totaling $144 million.

2. Grayscale Outflow
The second reason is the outflow of funds from the Grayscale Bitcoin Trust (GBTC). GBTC is a popular investment vehicle for institutional investors seeking exposure to Bitcoin ETFs. However, there has been a decrease in demand for GBTC, which could contribute to the drop in Bitcoin’s price. Currently, Bitcoin is trading at around $66,608. Ethereum has also experienced a significant decline, briefly dropping to $3,319 before stabilizing. These sharp price declines have led to widespread liquidations across the entire cryptocurrency market.

3. Historical Precedent
Lastly, Bitcoin’s historical patterns, particularly its tendency to undergo price corrections before halving events, play a role. Bitcoin’s halving occurs approximately every four years, and the next one is scheduled for this month, on April 18th!

The recent price drop in Bitcoin can be attributed to a combination of these three factors: high market leverage, institutional outflows, and historical patterns associated with halving events.

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