BTC's Shark Pullback
On March 19, Bitcoin experienced a significant drop of over 8%, falling below $62,000 USD. This was the largest one-day decline since November 9, 2022, when BTC plummeted by more than 14% due to the bankruptcy of the FTX exchange. According to CoinGlass data, over the past 24 hours, more than 241,800 people have lost their positions, resulting in a total loss of $739 million in the crypto market.
Alex Kruger, a trader and economist, attributed the significant Bitcoin pullback to various factors, including outflows from spot ETFs. On March 19, Bitcoin spot ETFs experienced net outflows of $326 million, the highest on record, according to provisional data released by investment firm Farside. Additionally, the grayscale Bitcoin spot ETF saw record outflows of $643 million on March 18, surpassing the previous record of $640 million set on Jan. 22, according to provisional data released by the same firm.
James Butterfill, Head of Research at CoinShares, stated that net inflows into the Bitcoin spot ETF were negative for the second consecutive day. It was due to increased Grayscale outflows and a drop in US demand for new ETFs, which led to a significant Bitcoin pullback.
According to Spot On Chain monitoring data, cumulative net inflows for 11 bitcoin spot ETFs launched by the U.S. SEC on Jan. 11 have now reached $11.68 billion in the past 47 trading days, surpassing the previous four trading days of inflows. BlackRock IBIT has had the lowest net inflows over the past 17 trading days, with just $75.2 million.
According to a Bloomberg report, Bitcoin's recent decline can be attributed to two main factors. Firstly, demand for Bitcoin's spot ETFs has decreased. Secondly, investors are questioning the Federal Reserve's ability to make rapid rate cuts. The U.S. spot Bitcoin ETF, which launched on Jan. 11, has so far received $11.7 billion in net inflows. However, the entire product group experienced its largest outflow on Tuesday, indicating a cooling of demand. The reason behind Bitcoin's significant decline is the uncertainty surrounding whether the inflation rate above the target will cause the Fed policymakers to reduce their expectations for rate cuts during the Wednesday meeting. This situation is not favourable for speculators.
Tony Sycamore, market analyst at IG Australia Pty, said bitcoin's recent struggles are partly related to the Fed's outlook. However, the promise of some of the later buyers who bought above $60,000 is now being tested as they expected a steady stream of new bitcoin ETFs to flow in.
According to CoinGecko data, the cryptocurrency market has lost approximately $460 billion since the bitcoin market reached $2.9 trillion last week. K33 Research predicts that bullish bets using derivatives will continue, potentially hindering a swift recovery in the digital asset market.
A new report by 10xResearch suggests that Bitcoin may retreat to 63,000, with 60,000 serving as a crucial support level. If it falls below support, it could drop to $52,000 to $54,000. While the forecast for a pullback to 63,000 has been fulfilled, it is premature to become bullish again. The report advises against buying on the low side.
A major bearish factor is the decrease in retail trading sentiment, as evidenced by a significant drop in trading volumes for torrents and modal coins. ETFs experienced net outflows for the second consecutive day, except for an inflow of over $400 million from BlackRock last night. From a technical standpoint, it is still anticipated that the price of Bitcoin will drop below $60,000 before attempting a more significant rally. Based on previous signals of new highs, we can anticipate upside targets of $83,000 and $102,000.
MSTR shares were down more than 10 percent at $1,344 in pre-market trading on Tuesday, down about 25 percent from the all-time high it touched on Friday.
