Bitcoin's Price Plunge Sparks $660M in Crypto Liquidations

Bitcoin faced a significant setback as its price plummeted by 7.5% in early trading on March 15, dropping from $72,000 to $66,500 within a few hours. This sudden decline led to over $661 million in crypto liquidations, impacting nearly 200,000 traders.

Despite a brief rebound to the $68,000 level, Bitcoin was rejected and fell further to around $67,500, where it currently trades, marking an 8.3% decrease from its March 14 all-time high of $73,737.

The majority of liquidations, 80% to be exact, were long positions, resulting in $525.2 million in liquidations. Short-position liquidations amounted to $136.5 million.

The overall crypto market capitalization declined by 7.3% to $2.68 trillion, with approximately $175 billion exiting the market.

Some analysts suggest that a shift in the market narrative regarding exchange-traded fund (ETF) inflows, along with economic data from the United States, may have contributed to the sell-off. ETF inflows were down 48% from their 14-day average on March 14, indicating a potential decline in investor confidence.

Analysts warn of a possible correction back to the low $60,000 or high $50,000 levels if ETF volumes continue to decline. Concerns over hot inflation data and the overall economic outlook are also contributing factors to the market uncertainty.

Despite the drop, some analysts see this as a healthy correction. However, the recent decline has wiped out most of the built-up open interest (OI) in derivatives markets, suggesting further downward pressure on Bitcoin's price.

Economic data releases in the United States, including the Producer Price Index (PPI) and Consumer Price Index (CPI), have also played a role in the market's volatility. The PPI data, coming in above expectations, has fueled projections for prolonged high rates from the Federal Reserve, while the hotter-than-expected CPI data has exacerbated economic concerns.

The decline in Bitcoin's price has had a ripple effect, with stock markets in Asia also experiencing retreats following the release of disappointing economic data from the United States.