Bitcoin is now at 55.000 dollars, after the historical highs of last weekend, March 13 and 14, 2021, when it reached a record amount of 61.000 dollars.
The cause of the fall is found in the massive liquidations of more than 2 billion dollars in margin positions. With the recovery that followed, the cryptocurrency returned to $55.000. In particular, about $2.2 billion in positions “closed” in the last 24 hours.
When the price of Bitcoin falls below the clearing price, the trading thresholds “close” because they do not meet the margin requirements of the position. In the last 24 hours, the positions of more than 195.000 investors “closed”. Binance had the largest share (approximately $435 million), followed by Bybit ($328 million) and Huobi ($192 million).
CryptoQuant CEO Ki Young Ju believes that Bitcoin’s failed attempt to reach $62.000 is due to zero or negative spread on the Coinbase exchange, which is the main indicator of demand among institutional investors. A positive spread means increased demand from institutional investors, as they prefer to trade through platforms.
“There will definitely be some correction in Bitcoin and other cryptocurrencies because they have strengthened so much in such a short time,” said Atichanan Pulges, CEO of Bitkub Capital Group Holdings, which operates Thailand’s largest cryptocurrency exchange. “The long-term outlook remains strong, as many more top financial institutions are considering including cryptocurrencies in their operations,” Atichanan said.
Bitcoin and other cryptocurrencies have returned to the forefront in the last year amid signs of growing investment interest in them, following the $1.5 billion purchase of Bitcoin by Tesla. On the other hand, critics argue that the digital currency is a speculative bubble fuelled by massive liquidity injections due to a pandemic.
Patrick Heusser, head of trading at Swiss company Crypto Finance AG, also believes that this Bitcoin correction is normal. The breakout of more than $60.000 was triggered by the actions of margin investors.
LMAX Digital general Joel Kruger believes that the devaluation of bitcoin was influenced by media reports about the introduction of criminal liability for the use of cryptocurrencies in India. Bitcoin is expected to sink even further in the short term if US bond yields continue to rise, as this destabilises markets. However, analysts at CrossTower are more optimistic. They believe that large organisations will keep bitcoin’s price over $50.000.