Bitcoin, the leading cryptocurrency in terms of market value, dropped sharply in one day to $66,630, while its transaction volume increased to $85 billion.
At the same time, other popular cryptocurrencies such as Ethereum (ETH), BNB, XRP and Litecoin (LTC) were also affected by the decline. Even meme coins like Dogecoin (DOGE) and Shiba Inu (SHIB) saw a massive decline of over 14%.
So what’s behind this decline?
US Fed Interest Rate Delay Delayed
One of the main reasons for today’s decline is due to higher Fed rate cuts. In his recent statement to Congress, US Federal Reserve Chairman Jerome Powell stated that interest rate cuts will largely depend on economic indicators such as inflation and employment.
However, high inflation in the US economy and strong performance in the employment market indicate that interest rate cuts may be later than expected. This situation causes investors to have difficulty understanding the Fed’s future steps regarding interest rate policies.
This uncertainty caused widespread fluctuations in financial markets. As the US dollar index rose, global stock markets were also shaken. Investors are reconsidering their risk appetite as they evaluate the Fed’s future steps regarding interest rate policies.
According to data from CME FedWatch, the probability of a 25 basis point rate cut in June is 54%, while the probability of a similar cut in July appears to be 47%. However, the uncertainties in these predictions cause volatility in the markets and make it difficult for investors to determine their strategies for the next period.
Crypto Options Expiry
In addition, Bitcoin and Ethereum options worth over $3 billion, which ended on March 15, brought significant activity to the crypto market. One of the most notable among these options was the 30,568 BTC option worth over $2.09 billion. As this option expired, the maximum pain point was set at $66,000. Although BTC briefly dropped to $66,770, it held above the maximum pain threshold, indicating potential opportunities for buyers during the decline.
Similarly, when 332,094 ETH options worth $1.24 billion expired, we saw that ETH maintained its uptrend, even though the maximum pain point for investors was at $3,550. ETH is currently trading at $3,680, recovering from the last 24-hour low of $3,571.
Bitcoin ETF Login
Additionally, the Spot Bitcoin ETF sector in the US experienced a significant inflow drop on Thursday, falling 80.6% to $133 million. This decline is in line with the decline in Wall Street’s general sentiment along with recent economic data. This event, recorded as the lowest level seen in the last eight trading days, indicates that uncertainties and risk aversion in the market are increasing.
Investors pulled back holdings in Grayscale’s GBTC in response to pre-halving market peaks and declines in traditional asset classes. Fluctuations, especially in the gold and stock markets, reduced confidence in cryptocurrencies and led to a shift towards alternative investment instruments.
The $257.1 million outflow in GBTC on Thursday attracted attention as a reflection of the uncertainties in the market and the risk aversion tendency of investors. This movement can be considered an indicator of volatility in the cryptocurrency market and investors’ sentiment.
$821 Million in Crypto Assets Liquidated
The recent influx of liquidity in the crypto market has resulted in a staggering loss of over $821 million in market capitalization. However, more than 247.8 thousand investors liquidated their positions within 24 hours. The largest single liquidation order involved a BTC-USDT transaction worth $13.30 million on the OKX exchange.
During this period, Bitcoin and Ethereum saw significant liquidations of over $279 million and $137 million respectively. This caused the overall crypto market to suffer losses, but some analysts see this as a potential opportunity to buy at a lower price.
You can follow the current price movement here.
