Bitcoin The recent sudden collapse of the price and strong liquidations shocked many investors. This has led to questions about the underlying reasons. So what could be the reasons for the sudden decline?
High Funding and Open Interest
The first of these seems to be the funding and open interest levels in the Bitcoin ecosystem. When funding benchmarks and open interest are high, it means leveraged positions proliferate, leaving BTC vulnerable to price manipulation. Whales or large BTC holders can take advantage of this situation and trigger a price decline by selling their assets.
The whale action then led to Bitcoin’s entire network witnessing a total liquidation of $157 million in the last hour alone, with long orders totaling $144 million.
Bitcoin Outflows from Grayscale
The second reason is Grayscale Bitcoin Trust Outflows recorded in (GBTC) assets. Demand for GBTC, a popular investment vehicle for institutional investors to invest in Bitcoin ETFs, has decreased. These large GBTC outflows may have triggered the decline in BTC price, which is currently trading around $66,608. Ethereum also experienced a notable decline, briefly falling to $3,319 before stabilizing. The sharp drop in prices resulted in widespread liquidations in the crypto market.
Third, as Koinfinans.com reported, is Bitcoin’s historical patterns, particularly its tendency to experience price corrections before halving events. Bitcoin’s halving, which occurs approximately every four years, is expected to take place this month, on April 18.
