As an experienced analyst, I believe that the recent downturn in the cryptocurrency market, with Bitcoin leading the plunge, was primarily driven by a decrease in demand for Bitcoin ETFs in the United States and waning interest from institutional investors. The sudden liquidation of over $360 million in assets, with long traders facing losses of over $246 million within 24 hours, is a clear indication of the market’s volatility.
As a researcher studying the cryptocurrency market, I’ve observed a noteworthy development: On April 30, 2024, the market took a sudden turn for the worse, with Bitcoin (BTC) spearheading the decline. The value of Bitcoin dipped below $60,000 – its lowest point in two weeks since soaring to a peak of $73,000 in March. This unexpected drop resulted in substantial losses for traders who had positioned themselves for Bitcoin’s price rise.
According to CoinGlass’ data, long traders suffered losses totaling $246 million over the past 24 hours. The sudden drop in Bitcoin’s price set off a chain reaction throughout the crypto market, leading to extensive liquidation as investors hurriedly revised their positions due to the market’s volatility.
Nearly $360 Million Liquidated in Crypto
Approximately $359.6 million worth of assets were sold in the market, with short sellers contributing around $114 million in losses. However, the market has since bounced back slightly, resulting in a current total loss of approximately $290.8 million.
Over the past four hours, traders suffering losses totalled $8 million between those holding long and short positions. Notably, substantial losses were documented for traders dealing in Bitcoin (BTC), Ethereum (ETH), JTO, and ZETA.
As an analyst, I’ve observed that Bitcoin’s price hovers around the $57,000 mark currently, representing a more than 10% downward trend over the last seven days based on data from CoinMarketCap. Similarly, Ethereum has experienced a weekly decrease of approximately 7%, with its trading value at $2,870 during this period.
Analysts at CryptoQuant explained the market downturn by pointing to decreasing demand for US Bitcoin spot Exchange-Traded Funds (ETFs). They indicated that this could mark the first month with substantial net withdrawals since these financial instruments became available in January of this year. According to an exclusive report from Coinspeaker, US Bitcoin ETFs experienced a notable outflow of approximately $5.5 million on April 30th.
Contributing Factors to Market Decline
As an analyst, I’ve noticed that along with the reduced appetite for Bitcoin Exchange-Traded Funds (ETFs), there’s been a noticeable deceleration in institutional investment demand for Bitcoin. A trend I’ve observed is the shrinking Bitcoin holdings of permanent investors and large market participants in the spot market.
“Demand for Bitcoin from large-scale investors, or ‘whales,’ experienced a significant surge of approximately 12% per month towards the end of March. However, this rate has since decelerated to around 6%. It’s important to note that price increases in Bitcoin are often fueled by more rapid expansion in demand from these substantial investors.”
The analysis in the report revealed a decrease in the Coinbase Premium, a trend that started in early March and dipped below zero more recently. This means that the price of bitcoin is currently lower on Coinbase than in other markets. This observation from CryptoQuant experts suggests a diminished appetite among US investors for buying bitcoin.
As a crypto investor, I’d interpret a negative Coinbase premium as follows: When the cost to buy Bitcoin on Coinbase, the popular US-based cryptocurrency exchange, is lower than its market price outside the country, it indicates that the demand for Bitcoin among US investors is waning. Consequently, this situation suggests that international buyers are more eager to acquire Bitcoin, causing its price to be higher in other regions.
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2024-05-02 12:06