Based

Bitcoin

Resistance

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On March 5, Bitcoin hit a notable milestone of surpassing $69,000 for the first time since 2021, setting a fresh <a href="https://coingape.com/breaking-bitcoin-achieves-all-time-high-climbing-above-69k/#:~:text=Bitcoin's%20value%20surged%20to%20exceed,as%20a%20leading%20digital%20asset." rel="noopener noreferrer nofollow">all-time high</a>. Nonetheless, this was soon followed by a rapid drop, with Bitcoin’s price falling by 8% from $69,173 to $63,801. Therefore, let’s investigate the causes behind this abrupt downturn in Bitcoin’s value.
<h2 class="p3" id="span-class-s1-b-while-did-the-bitcoin-price-drop-b-span">While did the Bitcoin Price Drop</h2>
Several factors contribution to the decline of Bitcoin price.
<h3 class="p2" id="span-class-s1-b-1-bitcoin-open-interest-declining-b-span">1. Bitcoin Open Interest Declining</h3>
Total open interest on exchanges for Bitcoin decreased following the recent all-time high, indicating a reduction in overly speculative trading activity, according to <a rel="noopener noreferrer nofollow" href="https://twitter.com/santimentfeed/status/1765172609703108764" target="_blank">Santiment</a>. This drop in Bitcoin, indicated the closure of over-speculative positions, both long and short, as traders reacted to price movements. The decrease in open interest suggests a temporary removal of speculative excess from the market, potentially leading to more stable price fluctuations based on genuine supply, demand dynamics and demand dynamics driving price fluctuations.
As funding rates stabilize, cryptocurrencies may experience less influence from futures and options positions, allowing for a more accurate market valuation. Despite the high long vs. short ratio persisting, the decline in open interest could pave the way for a quick rebound in cryptocurrency assets.
<img decoding="async" class="aligncenter size-full wp-image-184372" src="https://coingape.com/wp-content/uploads/2024/03/Screenshot-2024-03-06-at-13.08.0.png" alt="Bitcoin Open Interest" width="1075" height="707" srcset="https://coingape.com/wp-content/uploads/2024/03/Screenshot-2024-03-06-at-13.08.0.png 1075w, https://coingape.com/wp-content/uploads/2024/03/Screenshot-2024-03-06-at-13.08.0-300x197.png 300w, https://coingape.com/wp-content/uploads/2024/03/Screenshot-2024-03-06-at-13.08.0-768x505.png 768w, https://coingape.com/wp-content/uploads/2024/03/Screenshot-2024-03-06-at-13.08.0-150x99.png 150w" sizes="(max-width: 1075px) 100vw, 1075px">
<h3 class="p2" id="span-class-s1-b-2-bitcoin-miners-dumping-b-span">2.Bitcoin Miners Dumping</h3>
One of the reasons impacting Bitcoin’s price decline after hitting a new high was the activity of Bitcoin miners. According to data from <a rel="noopener noreferrer nofollow" href="https://cryptoquant.com/asset/btc/chart/network-indicator/spent-output-age-bands">CryptoQuant</a>, a miner-related address transferred 1,000 BTC to Coinbase just before Bitcoin soared to its all-time high and then sharply dropped. These addresses, with a history spanning over ten years, are linked to mining activities. Analysts suggest that such a significant transfer, especially when traders are anticipating Bitcoin’s highest price to short, could contribute to a substantial price decrease. This movement of 1,000 Bitcoins, valued at approximately $69 million, occurred as Bitcoin peaked at $69,000 before retracting to $62,000, further indicating the impact of miner activity on price volatility.
<h3 class="p2" id="span-class-s1-b-3-surge-in-liquidations-b-span">3. Surge in Liquidations</h3>
Liquidations occur when exchanges forcibly close leveraged trading positions due to traders’ inability to cover losses with their initial margin. This dynamic often intensifies during sharp price declines, triggering a cascade of liquidations that amplifies losses and further depresses prices.
In the case of Bitcoin, the rapid and intense price fluctuations in its price led to a surge in liquidations, with over $1.1 billion worth of derivatives trading positions being wiped out across all digital assets in the past 24 hours, according to <a rel="noopener noreferrer nofollow" href="https://www.coinglass.com/currencies/BTC">CoinGlass data.</a> Of this, approximately $870 million were long positions, reflecting bets on rising asset prices.&nbsp;
Major liquidation events like these are often seen as indicators of potential turning points in asset prices, reflecting the extreme volatility and speculative nature of the cryptocurrency market.
<h3 class="p2" id="span-class-s1-b-4-selling-pressure-b-span">4. Selling Pressure</h3>
The selling pressure significantly impacted Bitcoin’s price as it posed a significant barrier to its upward momentum. Large sell orders were clustered at higher price levels, particularly at $69,000 and $70,000 on crypto exchange Binance. This surge in selling activity overwhelmed the market, causing Bitcoin’s price to plummet by over $1,000 in just one minute. The sell-off continued in waves, driving the price below $65,000 and eventually reaching as low as $59,700. This rapid and intense selling pressure contributed to Bitcoin’s 8% decline from its peak, highlighting the impact of market dynamics on cryptocurrency prices.
<h2 class="p3" id="span-class-s1-b-market-performance-of-bitcoin-price-b-span">Market Performance of Bitcoin Price</h2>
As of now, <a href="https://coingape.com/price/bitcoin/#:~:text=Live%20Price%20of%20Bitcoin%20(BTC,market%20cap%20stands%20at%20%241%2C249%2C397%2C068%2C526." rel="noopener noreferrer nofollow">Bitcoin price</a> stands at $66,717.84, marking a modest 0.44% increase over the last 24 hours. Its trading volume has seen a significant uptick, rising by 36.19% to $101.98 billion. Despite a marginal 0.3% dip in market capitalization from the previous day, Bitcoin maintains its dominance with a market cap of $1.31 trillion. However, it’s worth noting that Bitcoin’s current price is down by 3.89% compared to its recent all-time high of $69,170.63, observed just 20 hours ago.
<figure id="attachment_184368" aria-describedby="caption-attachment-184368" style="width: 100%" class="wp-caption aligncenter"><img decoding="async" class="size-full wp-image-184368" src="https://coingape.com/wp-content/uploads/2024/03/Screenshot-2024-03-06-at-13.47.46.png" alt="Bitcoin Price Market Performance Chart" width="950" height="506" srcset="https://coingape.com/wp-content/uploads/2024/03/Screenshot-2024-03-06-at-13.47.46.png 950w, https://coingape.com/wp-content/uploads/2024/03/Screenshot-2024-03-06-at-13.47.46-300x160.png 300w, https://coingape.com/wp-content/uploads/2024/03/Screenshot-2024-03-06-at-13.47.46-768x409.png 768w, https://coingape.com/wp-content/uploads/2024/03/Screenshot-2024-03-06-at-13.47.46-150x80.png 150w" sizes="(max-width: 950px) 100vw, 950px">
 <figcaption id="caption-attachment-184368" class="wp-caption-text">
 Bitcoin Price Market Performance Chart
 </figcaption>
</figure>
Based on the technical analysis, Bitcoin’s current position presents a mixed outlook with conflicting signals across various indicators. Moving averages indicate a generally positive sentiment, signaling buying pressure and upward momentum. <a href="https://coingape.com/glossary/rsi-relative-strength-index/#:~:text=(RSI)%20indicator%3F-,The%20relative%20strength%20index%20(RSI)%20is%20a%20momentum%20indicator%20that,size%20of%20recent%20price%20changes." rel="noopener noreferrer nofollow">Relative Strength Index</a> (RSI) remain in the neutral zone, suggesting a lack of clear direction in market sentiment. 
Resistance and support levels provided by pivots indicate that Bitcoin’s price is currently balanced around the Pivot Point (P), with potential resistance levels at R1 ($69,488) and R2 ($77,814) if the price continues to rise, and support levels at S1 ($47,347) and S2 ($33,532) if the price declines. Overall, traders and investors should closely monitor key levels and indicators to gauge the future direction of Bitcoin’s price movement amidst this period of consolidation.
The post <a href="https://coingape.com/blog/why-bitcoin-price-dropped-8-after-hitting-all-time-high/" rel="noopener noreferrer nofollow">Why Bitcoin Price Dropped 8% after Hitting All-time High?</a> appeared first on <a href="https://coingape.com" rel="noopener noreferrer nofollow">CoinGape</a>.

Why Bitcoin Price Dropped 8% after Hitting All-time High?

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