Bitcoin Plunges 7%: Mass Liquidations and Drying Up of ETF Inflows Signal Bearish Shift

  • Bitcoin price took a sharp turn on March 15th, dropping over 8% from its all-time high.
  • This plunge coincides with a surge in liquidations and a concerning decline in investor confidence, potentially driven by anxieties over inflation and dwindling exchange-traded fund inflows.

Bitcoin (BTC) experienced a significant price drop on March 15th, shedding over 8% from its all-time high. This sudden plunge comes amidst a wave of liquidations and a concerning decline in exchange-traded fund (ETF) inflows.

Heavy Liquidations Signal Bearish Shift

The crypto market witnessed a dramatic shift in sentiment on Thursday. Bitcoin’s price plummeted by 7.5% within a few hours, dropping from $72,000 to $66,500 in early trading. This downward spiral resulted in over $661 million in liquidations across the market, impacting nearly 200,000 traders.

Data from Tradingview reveals that the vast majority (80%) of liquidations involved long positions, totaling a staggering $525.2 million over the past 24 hours. While short positions also saw liquidations, the amount paled in comparison at $136.5 million.

Market Capitalization Shrinks as ETF Narrative Falters

The broader crypto market sentiment mirrored Bitcoin’s woes. The total market capitalization declined by 7.3%, reaching $2.68 trillion as roughly $175 billion exited the cryptocurrency space.

Crypto derivatives provider Greeks Live noted a “recent change in market tempo” on March 14th, hinting at a potential shift in the prevailing narrative surrounding ETF inflows. Analysts suggest that a sustained decline in ETF volumes could trigger a correction, potentially driving Bitcoin’s price back to the low $60,000 or high $50,000 range.

Economic Data and Waning Investor Confidence

Pav Hundal, lead analyst at Swyftx, an Australian crypto exchange, attributes the correction to concerns over hot inflation data and dwindling ETF volumes. He highlights a significant 48% drop in Bitcoin ETF inflows compared to their 14-day average on March 14th, indicating a potential loss of investor confidence.

Also Read: Banking on Uncertainty: Will Bank Woes Fuel Bitcoin’s Rise or Spark a Crypto Crash?

Crypto analyst CrediBULL Crypto further emphasizes this sentiment, pointing out that aggregate spot Bitcoin ETF inflows reached their lowest point this month at $133 million on March 14th. He predicts a further price drop for Bitcoin, potentially reaching $63,000 to $64,000.

The release of economic data in the United States this week appears to have exacerbated the situation. Higher-than-expected Producer Price Index (PPI) data fueled concerns about the Federal Reserve maintaining high-interest rates for a longer period. This, coupled with hotter-than-anticipated Consumer Price Index (CPI) data earlier in the week, is believed to have intensified anxieties surrounding the American economy.

Friday also saw Asian stock markets retreat in response to the U.S. economic data, further dampening investor confidence.

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