Bitcoin price is down today as traders realize profits and futures liquidations surge.
The bullish momentum that propelled Bitcoin (BTC) $66,869 to an all-time high of $73,835 on March 14 is waning. Bitcoin is down 8.3% from the all-time high on March 18.
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The contraction in Bitcoin price comes as some investors believe the BTC market is overheated after spot ETF approval.
Let’s take a closer look at the factors impacting Bitcoin price today.
Bitcoin is in a pre-halving retrace
Some analysts believe that Bitcoin is at the beginning of the pre-halving phase that historically follows a certain pattern. Similar to previous halvings, BTC’s price appears to be following the five phases of the Bitcoin halving.
The timing of the pre-halving drawdown coincides with the upcoming Federal Open Market Committee (FOMC), which will conclude on March 20.
An X social network post from crypto trader and independent analyst Rekt Capital suggested that the ongoing price action is part of a pre-halving retrace, which has seen BTC dip by 38% and 20% during the 2016 and 2020 halving cycles.
Bitcoin liquidations ramp up
A sharp movement in the Bitcoin futures market can be noted by looking at liquidations. The timing of the long liquidations coincided with the elevated volatility. In a 24-hour period on March 18, over $40 million of long positions were liquidated. Bitcoin long liquidations spiked within 4 hours to over $15 million on the same day.
When BTC longs are liquidated without buying pressure from traders, Bitcoin price is negatively affected. Bitcoin trading volumes dropped over $25 billion from the March 5 year-to-date peak of $45 billion in daily activity.
The drop in exchange trading volume comes as spot selling continues to pressure Bitcoin price.
Short-term holders ticking up
In addition to trading volume decreasing more than half from year-to-date highs, long-term holders are de-risking and profit-taking. The most recent buyers of Bitcoin seem to be short-term holders. Short-term holders, as a cohort, have the highest BTC supply since July 26, 2022, which may lead to the continued fall of Bitcoin prices.
To date, Bitcoin’s price continues to be directly impacted by macroeconomic events, and it is also likely that further regulatory actions and the Federal Reserve’s monetary policy will continue to have some effect on the price of BTC.
In the long term, market participants still expect the Bitcoin price to recover, especially as more financial institutions are embracing BTC.
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