The value of Bitcoin has experienced a steep drop of 5.60%, leading to speculation about the factors
The post Bitcoin Price Plummets by 5.60%: What Caused Today’s Sharp Decline? appeared first on Coinpedia Fintech News
Bitcoin, the world’s leading cryptocurrency, sent shockwaves through the crypto market today as it experienced a significant price drop, plunging 5.60% to $66,000. The sudden decline of 5.60% to $66,000 has left investors and enthusiasts wondering about the factors behind this sharp fall.
The ripple effect of Bitcoin’s decline was felt across the crypto sphere, with other major cryptocurrencies like Ethereum also witnessing a downturn, trading at lows of $3,320.
Factors Behind the Decline
Significant Liquidations
One of the primary factors contributing to the rapid decline was the occurrence of significant liquidations, particularly on the largest crypto exchanges like Binance. Over the last 24 hours, 121,325 traders found themselves liquidated, resulting in a total loss amounting to $395.10 million.
However, recent reports from QCP Capital revealed that perpetual funding rates on these platforms surged to as high as 77% before abruptly falling.
Shift in Market Sentiment
Furthermore, the shift in market sentiment cannot be overlooked. Prior to today’s plunge, Bitcoin had maintained a comfortable position around the $70,000 mark for the past week.
However, on April 1st, Bitcoin spot ETFs experienced a substantial net outflow of $85.84 million, signaling a shift in market sentiment.
Meanwhile, the bearish sentiment surrounding Bitcoin was further fueled by broader global economic uncertainty, exacerbated by higher-than-expected inflation rates in the US. This uncertainty cast doubts on hopes for looser monetary policies and interest rate cuts.
Historical Volatility & Halving Impact
Additionally, Bitcoin’s historical volatility and the looming impact of the halving scheduled for April played significant roles in today’s sharp decline.
On March 14, Bitcoin reached an all-time high of $74,120, only to plummet to $66,885, dropping by 9% in a single day. This sudden fall likely prompted traders to secure profits, especially after Bitcoin’s value surged by 175% over the past year.
According to Matt Simpson, an analyst at City Index, Bitcoin’s price tends to be all over the place after hitting record highs.
He says Bitcoin follows a pattern where each peak is higher than the last one. This rollercoaster ride is partly due to “the Bitcoin halving,” scheduled for April, which is expected to reduce the creation of new Bitcoins to just 450 per day.
Bitcoin Price Analysis
Currently, the price of Bitcoin stands at $66,607, reflecting a 4.3% drop over the past 24 hours. However, amidst this decline, there has been a substantial surge in trading volume, skyrocketing by 66.8% to reach $40.5 billion.
