The price of Bitcoin (BTC) dropped sharply by almost 6% in less than four hours, with the opening of the new weekly candle on March 15.
Three factors contributed to the weakening of Bitcoin, namely, a new weekly opening, high financing rates and stable currency inflows, mainly driving the market upwards.
New weekly candle and a reset reset
When a new weekly candle opens, Bitcoin typically sees great volatility because the trend on Monday may dictate how Bitcoin should behave for the rest of the week.
In the past few hours, as the pseudonym “Rekt Capital” noted, Bitcoin has seen an overly extended setback. As a result, the trader said that BTC may be in the process of seeing a “volatile reboot”. The merchant said:
“BTC has retreated towards the red area and even if it extends too far below it – for now the day is still young, so the price can still resolve in relation to this red area and turn it into support Technically, the $ BTC is in a process of volatility retest. “
If Bitcoin does not recover from the $ 55,000 area, the trader has warned that a sharp correction to the $ 46,700 support level becomes a possibility.
The futures market was overheated
When the price of Bitcoin started to fall, BTC’s futures market financing rate hovered above 0.1% on major exchanges.
This indicates that the overwhelming majority of the market was either craving or buying Bitcoin, making it an overcrowded trade.
According to data from Bybt.com, 194,541 traders have been liquidated in the last 24 hours for a total of about $ 1.83 billion, the highest since February 21. The futures market suffered cascading liquidations, as the market was extremely overheated.
This wave of liquidations eventually led Bitcoin to fall below $ 57,000, which Cointelegraph Markets analyst Michael van de Poppe identified as a key support level. He said:
“Bitcoin can barely maintain itself at this critical level here. Necessary for an upward continuation, otherwise the price will fall back into the range.”
Large foreign exchange deposits and stable currency inflows
Before the crash occurred, the on-chain data analysis platform CryptoQuant pointed to large BTC deposits at Gemini.
Gemini is one of the leading Bitcoin exchanges in the United States, along with Coinbase, and is often considered a “whale exchange”.
Ki Young Ju, the CEO of CryptoQuant, said:
“This $ 18k BTC deposit is legitimate, as it was a transaction between the user’s deposit wallets and the hot Gemini wallet. The average entry of all exchanges has skyrocketed due to this deposit. Don’t take too much advantage if you are in a long position . “
In addition to the selling pressure of whales, Bitcoin’s recent spike led by stablecoin inflows into the exchanges was another sign of bearishness.
Ki noted that the rise was catalyzed by marginalized capital in stable currencies, rather than institutions in the United States. explained:
“The Coinbase Premium index was always significantly high when the $ BTC price exceeded 20k, 30k, 40k and 50k. It was significantly negative when the price dropped 60k. This 60k bull run is not driven by US institutions, it all came of stablecoins. “