The Bitcoin crash, after a rally to the $64,000 mark, has stirred both excitement and concerns in the crypto space. The Bitcoin price retreat after hitting nearly $64K on Wednesday has sparked speculations in the crypto market.
Meanwhile, the Bitcoin price has crossed the $60,000 mark for the first time since November 2021 and was only about 10% down from its ATH. However, amid the volatility, optimism persists, evident in the recent surge in Bitcoin price.
So, let’s explore the potential reasons behind the recent Bitcoin crash after its rally to $64K.
Key Reasons Behind The Recent Bitcoin Crash
Several factors may have contributed to the recent retreat in Bitcoin price. Some of the prominent reasons include:
Investors Taking a Cautious Approach
The recent retreat in Bitcoin’s price may find its roots in investors adopting a cautious stance amid the cryptocurrency’s unprecedented surge. While a flurry of factors including robust inflow into Bitcoin Spot ETFs, Michael Saylor’s Bitcoin accumulation, and optimism surrounding Bitcoin Halving propelled its gains, concerns over a looming correction loomed large.
Several market pundits, including Matrixport’s Daniel Yan, have sounded alarms over a potential 15% correction by April’s end, prompting some investors to exercise prudence. Notably, this cautious approach reflects a broader sentiment of wariness in the market, as participants brace themselves for potential downturns amid Bitcoin’s meteoric rise.
Profit-Booking Opportunities As Bitcoin Price Soars
As Bitcoin surged past the $60,000 mark, investors saw an opportunity to capitalize on their gains. After a prolonged rally, reaching levels not seen since November 2021, many investors opted to book profits.
Meanwhile, the substantial increase in Bitcoin’s value over the past year prompted some to sell, locking in their 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 their gains amid uncertainty.
Thus, while the price retreat may signal a temporary setback, it also underscores the dynamic nature of cryptocurrency investing and the various factors influencing market movements.
Coinbase Outage
The recent crash in Bitcoin’s price can be attributed in part to the outage experienced by Coinbase, a popular crypto exchange platform. This disruption, which caused a temporary halt in trading, led to a significant loss of market sentiment and triggered a massive sell-off.
Notably, within a mere 15 minutes, the outage resulted in a $100 billion loss in Bitcoin’s market capitalization. As Coinbase users found themselves unable to access their accounts, panic ensued, further exacerbating the downward spiral of Bitcoin’s price.
As reported by CoinGape Media, during the Coinbase outage between 12:15 p.m. ET and 12:30 p.m. ET on February 28, Bitcoin’s price plunged nearly 9% from $64,000 to $59,000. This abrupt pullback occurred just as Bitcoin was on the verge of reaching a new all-time high, intensifying the shockwaves within the cryptocurrency community.
Although the issue has since been resolved, the volatility injected into the market by the Coinbase outage serves as a stark reminder of the fragile nature of the cryptocurrency ecosystem.
Crypto Market Liquidation
Another key reason behind the Bitcoin price crash could be the significant liquidation event within the crypto market, totaling a staggering $740 million. This massive liquidation, as per CoinGlass data, involved 176,553 traders and underscores a bearish sentiment prevailing in the market.
Notably, Bitcoin led the liquidation list, with approximately $274 million liquidated over the past 24 hours, affecting both long and short positions. On long positions, the BTC liquidation totaled $104.53 million, while on the short position, $169.35 million was liquidated.
Among other cryptos, Ethereum noted liquidations of $116.08 million, followed by Dogecoin and Solana noting $50.68 million and $28.31 million respectively. This highlights the broad-based nature of the market downturn.
Notably, liquidations occur when exchanges close leveraged trading positions due to traders’ inability to meet margin requirements, further exacerbating market volatility.
PCE Inflation Anticipation
Some investors might have taken a pause ahead of the key PCE inflation data release. Given the higher-than-expected inflation data as seen in the Consumer Price Index (CPI) and Producer Price Index (PPI), concerns have escalated over the Fed’s potential rate-cut timeline.
However, economists anticipate a slight cooling in the annual Personal Consumption Expenditures (PCE) inflation to 2.4% from 2.6%, with a 0.3% monthly rise. The Core PCE, favored by the Fed, is expected to climb 0.4% monthly, while the yearly rate is forecasted to ease to 2.8% from 2.9%.
Optimism Prevails Despite The Recent Bitcoin Crash
The Bitcoin price was up 5.78% to $62,550.93 as of writing, with its last 24-hour trading volume soaring 90.17% to $90.94 billion. Meanwhile, the crypto has touched a high of $63,913.13 and a low of $58,711.63 in the last 24 hours.
However, despite concerns surrounding the recent Bitcoin Crash, optimism persists in the crypto market, bolstered by derivatives data. Notably, Bitcoin Futures Open Interest surged by 4.67% to 446.04K BTC or $27.87 billion, CoinGlass data showed.
Meanwhile, CME Exchange led with a 2.90% increase to 127.90K BTC or $7.80 billion, followed by Bybit with a 2.44% rise to 71.28K BTC or $4.49 billion. In contrast, Binance Exchange saw a 0.78% decline to 104.15K BTC or $6.56 billion.
Notably, these figures hint at underlying confidence amidst market volatility, providing a glimmer of hope for investors navigating uncertain terrain.
