Bitcoin price is down today as a swift reversal in market sentiment triggered a wave of liquidations.
BTC $64,557 price dropped to an intra-day low at$62,570 on March 22, less before the much-awaited Bitcoin halving event.
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The bullish momentum that propelled BTC toward a new all-time high of $73,835 on March 14 seems to be waning as the price trades 5.6% lower than the daily open at $65,466.
Apart from the impact of continued outflows from spot Bitcoin ETFs on the BTC price, the pioneer cryptocurrency is facing yet another issue: a strengthening U.S. dollar.
Let’s take a closer look at the factors impacting Bitcoin price today.
The U.S. dollar’s strong recovery
The U.S. dollar Index (DXY), the metric that tracks the performance of the greenback against top world currencies, has risen 1.3% from its March 21 low of 102.79 to the current value of 103.97 following strong economic data from the United States.
Data from PMI surveys reveal that continued economic activity in the private sector and strengthening input price pressures provided the tailwind the DXY needed to initiate a recovery.
The dollar’s recovery has also been attributed to a decrease in the Initial Jobless Claims, which edged lower to 210,000 in the week ending March 16.
From a technical perspective, the U.S. dollar Index looks on track to rise by more than 0.6% to complete a classic V-shaped recovery pattern toward 2024 highs above 104.
Spot Bitcoin ETFs experience four consecutive days of negative flows
March 21, marked the fourth straight day of capital outflows from the spot Bitcoin exchange-traded funds (ETFs), the longest streak since they began trading on Jan. 11.
More than $538.8 million worth of BTC flowed out of Grayscale’s GBTC on March 21, according to data from BitMEX Research. BlackRock’s IBIT saw inflows of $233 million, the fund’s second-largest day this week. Fidelity’s Bitcoin ETF FBTC saw inflows of just about $2.9 million. This led to a net outflow from spot Bitcoin ETFs to $93 million.
BitMEX research said,
“We have now had four continuous days of net outflow days.”
Continued net outflows from Bitcoin ETFs and the selling pressure faced by BTC have been blamed on large GBTC outflows. Many investors had their funds in GBTC before it was converted to a spot ETF and are now redeeming their investments or moving to cheaper options.
Bitcoin long liquidations ramp up
A sharp movement in the Bitcoin futures market appears to have been a reason for the swiftness of today’s price decline. The timing of the long liquidations coincided with the sharp drop in the price of the pioneer cryptocurrency.
Data from Coinglass shows that more than $53 million in BTC long positions have been liquidated over the last 24 hours. The total liquidations across the crypto market amounted to $250 million – $173 million were long liquidations.
Typically, long liquidations occur when there is a sudden drop in the price of the asset that is being traded. This is because traders who were bullish on the asset and had opened long positions face losses since the market has moved against them.
According to data from blockchain data and intelligence platform Glassnode, the number of Bitcoin transferred to exchanges spiked on March 21
Increased exchange inflows for a particular asset suggest increased selling pressure in the market.
With an increasing number of BTC sent to known exchange wallets, investors seem to be taking profits at current prices, explaining the current downturn in price.
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