Key Points
- Bitcoin’s price experienced a significant drop after reaching an all-time high, leading to the liquidation of over $1 billion in derivative trades.
- Bitcoin ETFs have seen strong inflows since their launch, with a notable surge in the US Spot Bitcoin ETF.
Bitcoin (BTC) saw a substantial drop of over 10% after reaching a new all-time high on Tuesday, March 5. The largest cryptocurrency in the world encountered substantial selling pressure on crypto exchanges, preventing the price from surpassing $69,000.
At one point, the price of Bitcoin dipped below $60,000. Despite reaching $69,200 earlier in the day, the order book on Binance showed substantial sell orders. This included over 300 BTC valued at approximately $20 million at the $69,000 mark, and more than 500 BTC available for sale at $70,000. Currently, Bitcoin (BTC) is trading at $66,622 with a market cap of $1.31 trillion.
Market Volatility and Liquidations
The volatile market movements led to a wipeout of leveraged positions. As a result, more than $1.1 billion worth of derivative trades across all cryptocurrencies were liquidated in the last 24 hours. Of these liquidated positions, approximately $870 million were long positions, indicating bets on increasing asset prices.
Much of the recent price increases came from optimistic speculations in the derivatives market. Bitcoin derivative investors have historically accessed leverage up to 100 times the value of their holdings through products like perpetual futures. At the same time, open interest in Bitcoin futures reached an all-time high, surpassing $30 billion, reflecting heightened market activity and interest in Bitcoin trading.
On-chain data provider Santiment reported a significant decline in total open interest on exchanges for Bitcoin following the new all-time high. This drop in open interest, particularly notable for Bitcoin, signifies the closure of numerous over-speculative trades.
Strong Inflows into Bitcoin ETFs
Bitcoin ETFs have seen strong inflows since their launch in January. On Tuesday, March 5, the trading volumes across all spot Bitcoin ETFs crossed a staggering $10 billion. On the same day, a significant milestone was reached in the United States with the Spot Bitcoin ETF witnessing an unprecedented surge in inflows. According to provisional data by Farside UK, the US Spot Bitcoin ETF received approximately $662.5 million in inflows, marking one of its highest daily inflows on record.
The spotlight is on BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s FBTC, which collectively attracted over $900 million in inflows. Specifically, BlackRock’s IBIT reported an impressive influx of $788.3 million, highlighting the increasing confidence of institutional investors.
