Key Reasons Behind BTC’s Fall After Rising to $64 Thousand
The crash that followed Bitcoin’s rise to $64,000 increased both excitement and concerns in the crypto space. The decline in Bitcoin price after reaching nearly $64,000 on Wednesday has sparked speculation in the crypto market.
Bitcoin price surpassed $60,000 for the first time since November 2021, remaining nearly 10% behind its all-time high. However, optimism remains despite the volatility, as the recent rise in Bitcoin price shows.
So let’s examine the potential reasons behind the recent crash after Bitcoin rose to $64,000.
Key Reasons Behind the Recent Bitcoin Crash
Several factors may have contributed to the recent decline in Bitcoin price. Some of the prominent reasons are:
Investors are cautious
The roots of the recent decline in Bitcoin price can be found in investors adopting a cautious stance towards the cryptocurrency’s unprecedented rise. While many factors fueled gains, including strong inflows into Bitcoin Spot ETFs, Michael Saylor’s Bitcoin accumulation, and optimism surrounding Bitcoin Halving, concerns about an impending correction were also large.
Several market experts, including Matrixport’s Daniel Yan, have raised alarms about a possible 15% correction by the end of April, causing some investors to remain cautious. Notably, this cautious approach reflects a broader sense of caution in the market as participants brace themselves for potential setbacks amid Bitcoin’s meteoric rise.
Profit Booking Opportunities as Bitcoin Price Rises
As Bitcoin surpassed $60,000, investors saw an opportunity to capitalize on their gains. After a prolonged rally to levels not seen since November 2021, many investors chose to book profits.
Meanwhile, Bitcoin’s significant rise in value last year caused some to sell, locking up profits and potentially contributing to the recent price crash. This profit-taking behavior reflects a common strategy in volatile markets where investors seek to secure gains amid uncertainty.
Therefore, while a price pullback may indicate a temporary setback, it also underlines the dynamic nature of cryptocurrency investing and the various factors that influence market movements.
Coinbase Outage
The recent drop in Bitcoin price can be partially attributed to the outage experienced by Coinbase, a popular crypto exchange platform. This disruption, which caused a temporary halt to trading, led to a significant loss in market sentiment and triggered a massive sell-off.
Notably, the outage, which occurred in just 15 minutes, caused a loss of $100 billion in Bitcoin’s market value. When Coinbase users realized they could not access their accounts, panic ensued and the downward trend of the Bitcoin price became even more intense.
As reported by parofix Media, the price of Bitcoin fell nearly 9% from $64,000 to $59,000 during the Coinbase outage between 12:15 a.m. ET and 12:30 a.m. ET on February 28. This sudden pullback occurred as Bitcoin was on the verge of reaching an all-time high, intensifying the shockwaves within the cryptocurrency community.
While the issue has since been resolved, the volatility the Coinbase outage injected into the market is a powerful reminder of the fragile nature of the cryptocurrency ecosystem.
Crypto Market Liquidation
Another major reason behind the Bitcoin price crash could be a staggering liquidation event totaling $740 million in the crypto market. According to CoinGlass data, this massive liquidation involved 176,553 investors and underlines the bearish trend prevailing in the market.
Bitcoin, in particular, topped the liquidation list, impacting both long and short positions, with approximately $274 million liquidated in the last 24 hours. The total of BTC liquidations in long positions was $104.53 million, while $169.35 million was liquidated in short positions.
Among other cryptocurrencies, Ethereum recorded liquidations of $116.08 million, followed by dogecoin and solana with $50.68 million and $28.31 million respectively. This highlights the broad-based nature of the market downturn.
Specifically, liquidations occur when exchanges close leveraged trading positions due to traders’ inability to meet margin requirements, further increasing market volatility.
PCE Inflation Forecast
Some investors may have paused ahead of key PCE inflation data. Considering higher than expected inflation data in the Consumer Price Index (CPI) and Producer Price Index (PPI), concerns have increased regarding the Fed’s possible interest rate cut timeline.
However, economists forecast annual Personal Consumption Expenditures (PCE) inflation to decline slightly, from 2.6% to 2.4%, with a monthly increase of 0.3%. The Fed’s preferred Core PCE is expected to rise 0.4% monthly, while the annual rate is expected to decline from 2.9% to 2.8%.
Optimism Prevails Despite Latest Bitcoin Crash
Bitcoin price increased by 5.78% to $62,550.93 as of the time of writing, and the transaction volume in the last 24 hours increased by 90.17% to $90.94 billion. Meanwhile, the cryptocurrency reached a high of $63,913.13 and a low of $58,711.63 in the last 24 hours.
Bitcoin price
However, despite concerns about the recent Bitcoin Crash, optimism remains in the crypto market, supported by derivatives data. According to CoinGlass data, Bitcoin Futures Open Interest increased by 4.67% to 446.04 thousand BTC or $27.87 billion.
Meanwhile, CME Exchange rose 2.90% to 127.90 thousand BTC or $7.80 billion, followed by Bybit, which rose 2.44% to 71.28 thousand BTC or $4.49 billion. In comparison, Binance Exchange fell 0.78% to 104.15 thousand BTC or $6.56 billion.
These figures, in particular, provide a glimmer of hope for investors navigating uncertain terrain by pointing to the foundation of confidence amid market volatility.
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A seasoned professional with 3 years of experience in the financial market, Rupam has honed his skills as a meticulous research analyst and insightful journalist. She enjoys exploring the dynamic nuances of the financial landscape. Currently working as a sub-editor at Coingape, Rupam’s expertise goes beyond traditional boundaries. His contributions include breaking news, examining AI-related developments, providing real-time crypto market updates, and providing insightful economic news. Rupam’s journey is marked by his passion to demystify the intricacies of finance and deliver impactful stories that will resonate with diverse audiences.
The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. Neither the author nor the publication accepts any liability for your personal financial loss.
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