Bitcoin has experienced a sharp decline from its March 14 high of over $73,600 to today’s low of less than $60,800, translating into a -17% loss in value. This significant drop has sparked a flurry of activity on social media platforms, particularly X (formerly Twitter), where crypto experts have been fervently discussing the possible reasons behind this recession and speculating about what the future holds for the world’s leading cryptocurrency.
Unpacking the Bitcoin Crisis: Expert Opinions
Alex Krüger, a respected figure in both macroeconomics and cryptography, was quick to identify the main factors that contributed to Bitcoin’s price collapse. According to Krüger, the drop can be attributed to several key factors: excessive leverage in the market, the negative influence of Ethereum on overall market sentiment due to ETF speculations, a notable decrease in Bitcoin ETF inflows, and the irrational exuberance in lathe Solana memecoinswhich he disparagingly refers to as “shit mania.”
Reasons for the accident, in order of importance
(for those who need them)
#1 Lots of leverage (funding is important)
#2 ETH driving the market south (the market decided that the ETF would not be approved)
#3 Negative BTC ETF inflows (be careful, data is T+1)
#4 Solana shitcoin mania (gone too far)-Alex Krüger (@krugermacro) March 20, 2024
WhalePanda, another influential voice in the crypto space, pointed out the alarming rate of ETF outflows, with a record $326 million leaving the market yesterday. This movement was particularly harmful for GBTC, which recorded outflows of 443.5 million dollars.
In contrast, Blackrock Inflows it was just US$75.2 million, marking the second lowest value to date. Additionally, Fidelity recorded just $39.6 million in inflows. “Not much to say, this is bad for the price and we will probably see a drop now because this news also affects sentiment. Let’s see what the flows will be tomorrow. The positive is that there are about 30 days left until the halving and GBTC is being rejected,” he noted.
Yesterday’s ETF flows @FarsideUK.
We had US$326 million in outflows. Biggest output to date.
Blackrock didn’t save us from $GBTCwhich was obvious with the price action.$GBTC had outflows of $443.5 million, Blackrock had inflows of $75.2 million, second lowest for… pic.twitter.com/hIingoYMly
– WhalePanda (@WhalePanda) March 20, 2024
Charles Edwards, founder of crypto hedge fund Capriole Investments, offered a historical perspective on Bitcoin’s recent price movement, suggesting that a 20% to 30% pullback is within the norm for Bitcoin bull runs.
“A normal retracement of the Bitcoin bull run is 30%. In December, we were already on the longest winning streak in Bitcoin history. A 20% pullback here takes us to $59,000. A 30% decline would be US$51,000. These are all levels that we should be comfortable expecting as possibilities,” he said.
Rekt Capital provided an analysis of Bitcoin price pullbacks since the 2022 bear market bottom, noting that the current pullback is only the fifth major pullback, with all previous ones exceeding a depth of -20% and lasting from 14 to 63 days. In short, there are two main takeaways from this current downturn:
The closer Bitcoin gets to a -20% retracement, the better the opportunity.
Retraces need time to fully mature (at least 2-3 weeks, maximum 2 months).
Since the November 2022 bear market bottom…
Bitcoin has experienced the following setbacks:
• -23% (February 2023) lasting 21 days
• -21% (April/May 2023) lasting 63 days
• -22% (July/September 2023) lasting 63 days
• -21% (January 2023) lasting 14 days
That… pic.twitter.com/cQyQOLA5Zv
-Rekt Capital (@rektcapital) March 19, 2024
Alex Thorn, head of research at crypto giant Galaxy Digital previously warned of the likelihood of significant corrections during bull markets, suggesting that the current pullback is relatively normal. “Two weeks ago I warned that major corrections are not only possible, but *likely* in Bitcoin bull markets. At -15%, this is pretty normal historically. Bull markets scale a wall of worry.”
Macro analyst Ted (@tedtalksmacro) specifically focused on the implications of upcoming meeting of the Federal Open Market Committee (FOMC). He highlighted the massive outflows from spot BTC ETFs, attributing them to the cautious stance of traders ahead of the FOMC decision and the potential impact of the US fiscal season.
However, following the drop to $60,800, Ted suggested that the market could have fully priced in the worst-case scenario, suggesting a potential bullish reversal if FOMC decisions align with market expectations for interest rate cuts by the end of year. He stated:
Time to bid. FOMC coverage complete, worst case pricing. The only thing that happens from here is that these protective positions play out in the event today. Bulls should appear here soon. (…) The market fully priced in another Fed tightening at today’s meeting, and is pricing in 3 rate cuts by the end of the year. Anything that deviates from today’s new dot chart economic/material projection will cause the market to move sharply.
At press time, BTC traded at $62,979.
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