Why Bitcoin fell 15% from its all-time high: Expert insights into the “danger zone” and other factors

Key Takeaways

• Bitcoin Volatility: Bitcoin’s recent 15% plunge highlights the volatility inherent in Bitcoin, reminding investors of the unpredictable nature of digital assets.
• Historical Patterns: Expert analysis shows interesting similarities between Bitcoin’s current downtrend and past pre-halving retracements, suggesting potential patterns for investors to consider amid market volatility.
• Institutional Impact: Insights into institutional inflows and the impact of external factors such as the US Federal Reserve’s interest rate decisions highlight the growing influence of institutional players in cryptocurrency markets.
• Broader market dynamics: While Bitcoin’s decline has dominated the headlines, notable altcoins have experienced significant surges amid the turbulence, reflecting a variety of investment opportunities outside of Bitcoin.

Bitcoin (BTC) has fallen more than 15%, a week after reaching an all-time high.

Due to an unexpected turn of events, Bitcoin (BTC), the world’s leading cryptocurrency by market capitalization, suffered a significant decline, plummeting by more than 15% from its all-time high of $73,646.68 achieved on March 14, 2024, to $62,373 on March 19. Yes. , 2024. This retracement caught the attention of investors and analysts alike and prompted an in-depth analysis of the factors behind Bitcoin’s sharp decline and its future prospects.

Bitcoin “Danger Zone” and Historical Precedents

According to Rect CapitalCryptocurrency trader and analyst, Bitcoin is input “Danger Zone”, This is the period historically associated with pre-halving retracements.

This retracement occurred 14 to 28 days before the Bitcoin halving event. This is a pivotal moment for the Bitcoin ecosystem, reducing the rewards for mining new blocks and effectively halving the rate at which new Bitcoins are created.

In 2020, the pre-halving retracement decreased by 20%, while in 2016 it reached a depth of 40%. With Bitcoin currently 30 days away from its next halving and experiencing a 15% decline this week, comparisons to these historical patterns are inevitable.

Market Volatility and Recovery Efforts

Jyotsna Hirdyani, Head of South Asia at Bitget The surprising volatility of the cryptocurrency market has been highlighted over the past week as Bitcoin surged to record highs and then suffered a sharp decline.

Nonetheless, Bitcoin showed its resilience on Monday with a strong recovery, bouncing back to levels around $69,000, which had previously served as significant resistance points.

Institutional influx and external factors

Data from Farside Investors shows an influx of institutional interest, with net inflows into 10 spot Bitcoin ETFs reaching $2.57 billion, up 15% from the previous week’s inflows of $2.24 billion. give.

Nonetheless, potential factors such as the U.S. Federal Reserve’s (Fed) interest rate decision could trigger a near-term correction. Historically, Bitcoin has seen high volatility ahead of halving events and has hit new all-time highs in the months since.

Despite the lackluster performance of Bitcoin and several other cryptocurrencies, there are notable exceptions showing strong growth.

Galaxy Asset Management, a subsidiary of cryptocurrency giant Galaxy Digital, disclosed that its latest assets under management amounted to $10.1 billion as of the end of February. This is a significant increase of 24.8% compared to the previous month, driven primarily by the increase in the market value of assets under management, as reported by the company.

Moreover, the broader cryptocurrency market has seen an influx of investments in smaller cryptocurrencies, often referred to as “altcoins.” A notable rise has been observed in some of these assets over the past week. Solana network’s SOL token is up 25%, Avalanche’s AVAX is up 12%, Aptos is up 28%, Conflux (CFX) is up 17%, and Pyth network (PYTH) is up 15%, according to data from CoinMarketCap.

Nonetheless, the momentum of capital inflows into the top 10 Bitcoin exchange-traded funds (ETFs) has been declining recently. On Monday, these major ETFs attracted $178 billion, a notable decline from last week’s daily inflows, which often exceeded $400 billion, according to LSEG data.

Selling pressure and the Fed’s influence

Dhruvil Shah, SVP of Technology at Liminal It pointed to the extreme selling pressure Bitcoin faced last week, especially during the weekend with no institutional trading. This pressure caused Bitcoin to fall to its lowest level since March 6. However, there has been some recovery, with Bitcoin rebounding from around $64,500 to nearly $69,000 as of today. Anticipation surrounding the US Federal Reserve’s (Fed) upcoming interest rate announcement could further impact Bitcoin price volatility this week.

Despite the recent economic downturn, the long-term outlook for Bitcoin and the broader digital asset market remains positive. The impending fourth Bitcoin halving and increasing adoption of digital assets by both businesses and investors are expected to drive the market forward. As the cryptocurrency landscape continues to evolve, Bitcoin’s resilience and adaptability will be key to its long-term success and stability.

Also Read: 84% of Crypto Investors Predict Bitcoin Halving Will Drive BTC Price to ‘Significant’ Highs