Is today’s crypto market crash a chance to buy?
Bitcoin, the dominant digital currency, experienced a sudden and significant drop in value, falling to $66,690 in just one day. This decline led to a decrease in its market capitalization, which plummeted to $1.30 trillion. The trading volume of Bitcoin also surged to $78.6 billion, creating a turbulent situation for investors.
The global cryptocurrency market cap followed suit, experiencing a 7% drop to $2.55 trillion. Ethereum (ETH) was the hardest hit, losing over 9% of its value. Other major players like BNB, XRP, and Litecoin (LTC) also saw declines. Even meme coins such as Dogecoin (DOGE) and Shiba Inu (SHIB) suffered significant drops of more than 14%.
The cause of today’s downturn is attributed to uncertainty surrounding the possibility of a rate cut by the US Federal Reserve. In recent testimony to Congress, Federal Reserve Chair Jerome Powell hinted at potential rate cuts depending on economic data such as inflation and job figures. However, signs of increasing inflation and a recovering US economy suggest that rate cuts may be delayed until the end of the year. This uncertainty has led to market volatility, with the US dollar index rising and global stock markets faltering.
Furthermore, the expiration of options contracts on Friday injected some life into the crypto market. Over $3 billion worth of Bitcoin and Ethereum options expired on March 15th. Despite a brief drop in the price of BTC, it managed to stay above a certain threshold, providing potential buying opportunities during the downturn. Similarly, ETH options valued at $1.24 billion saw traders maintaining a bullish stance, with ETH bouncing back from a 24-hour low to trade at $3,748.
The US Spot Bitcoin ETF sector also experienced a significant decline in inflows, dropping by 80.6% to $133 million on Thursday. This decline coincided with a downturn in Wall Street sentiment following recent economic data releases. Investors responded by withdrawing holdings from Grayscale’s GBTC, possibly influenced by market signals such as the pre-halving market peak and declines in gold and equity markets. GBTC recorded an outflow of $257.1 million on Thursday, reflecting the prevailing market sentiment.
Overall, the recent liquidity flush in the crypto market resulted in a loss of over $821 million in market value. However, despite this setback, more than 247.8K traders liquidated their positions within 24 hours. Some analysts view this as an opportunity to buy at a lower price, anticipating a potential market rebound.