The unexpected and spontaneous decline in the price of Bitcoin and other prominent altcoins on April 12 resulted in massive liquidations across the crypto market. While the exact cause of this widespread price dip remains unknown, there are several plausible reasons being considered. According to data from CoinMarketCap, Bitcoin slipped by 4.49% in the last day, dropping as low as $66,052. This decline in BTC’s price had a ripple effect on the market, with other major altcoins like Ethereum and Solana also experiencing daily losses, with Ethereum dropping by 8.12% and Solana by 12.16%.
The impact of these losses was significant, with a total of 277,843 traders losing their leverage positions as total crypto liquidations reached $877.21 million in the last 24 hours, based on data from Coinglass. Long positions accounted for the majority of these liquidations at $782.98 million, while short traders lost only $94.24 million. Within just one hour, $467 million worth of leverage positions were closed due to the general price decline. The exchange with the highest amount of liquidations was Binance, with a total of $369.85 million, while the largest single liquidation order valued at $7.19 million occurred in the ETH-USD market on the OKX exchange.
Market Correlation and External Factors
Interestingly, the decline in Bitcoin’s price coincided with a dip in the US stock market, as the S&P 500 index dropped by 1.6% to trade as low as $5,108. This market crash followed recent CPI data that showed an increase in the inflation rate to 3.5% year over year in March. The implications of this data suggest that the US Federal Reserve (Fed) may not implement any rate cuts soon, as it aims to bring inflation down to its annual target of 2%. This forecast is bearish for the crypto market in general, as Fed rate cuts typically encourage investors to seek riskier assets like Bitcoin with the potential for higher returns.
On a more positive note, Bitcoin has seen a rise in non-empty wallets on its network leading up to the upcoming Halving event on April 19. According to blockchain analytics platform Santiment, there has been an increase of 370,000 BTC wallets holding active coins over the past six days. The analytics team is optimistic that investors will continue to accumulate Bitcoin leading up to the Halving event. At the time of writing, Bitcoin was trading at $66,882, with a significant increase in daily trading volume, currently valued at $43.80 billion. However, despite these positive signs, Bitcoin’s price performance has been lackluster in recent times, with declines of 1.33% and 6.20% in the last seven and 30 days, respectively.
The recent decline in the crypto market, led by a drop in Bitcoin’s price, has raised concerns and caused significant liquidations across the market. While the exact cause of this price dip remains unknown, external factors such as a correlation with the US stock market and recent inflation data have likely played a role. Despite some positive indicators like an increase in non-empty wallets and trading volume, Bitcoin’s price performance has been less than impressive recently. Investors are advised to conduct their own research and exercise caution when making investment decisions in the volatile crypto market.
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