Key Points
- Bitcoin (BTC) experienced a significant drop, causing a $1 billion market-wide liquidation.
- Despite the crash, the market rebounded swiftly with BTC and Ethereum (ETH) seeing a rise in their value.
On March 5, the cryptocurrency market witnessed a significant price volatility. Bitcoin (BTC) momentarily touched an all-time high of $69K before falling to $59K, resulting in a $10K loss within a few hours. This sharp decline led to a ripple effect across the sector.
Effect on Other Cryptocurrencies
As Bitcoin is considered a market indicator, its fall led to substantial declines in other assets. Popular memecoins such as Dogecoin (DOGE) experienced about a 30% discount. Similarly, Shiba Inu (SHIB) spot prices fell by over 40% on the Binance exchange before stabilizing.
The sudden crash was particularly damaging for leveraged traders. According to Coinglass data, a total of $1 billion in liquidation was reported within 24 hours. Over $800M of this amount was accounted for by long positions in Bitcoin, leading to significant losses for leveraged bull traders.
Reasons Behind the BTC Slump
Market experts attributed this massive sell-off to profit-taking after Bitcoin retested its all-time high and miners selling their holdings. Data from CryptoQuant showed a spike in Miners’ Outflow, indicating that miners were moving more BTC to exchanges for selling, a bearish signal.
However, the market rebounded quickly on March 6. Bitcoin reclaimed $67K during the afternoon Asian trading session. The second-largest cryptocurrency by market cap, Ethereum (ETH), also saw a 7% increase, crossing $3.8K.
In the memecoin sub-sector, Dogwifhat (WIF) experienced a significant rebound, outperforming its peers. It saw a 35% increase and traded above $2 after being listed on the Binance Exchange. On the other hand, SHIB and DOGE saw increases of 5% and 10%, respectively.
Some market observers believe that Bitcoin’s price will increase due to the current supply shock and the upcoming Halving event in April. Adex Adelman, CEO of Lolli (a bitcoin rewards application), echoed this sentiment, stating that the daily average demand of $500M inflow from ETFs exceeds miners’ BTC output. He also predicted that the Halving event in April would reduce BTC supply, leading to price appreciation to $150K by next year.
