Bitcoin (BTC) is experiencing significant volatility today, with a 7% correction after reaching a new all-time high of $69,324 on the Coinbase exchange. The price of Bitcoin has been boosted by substantial inflows into spot BTC ETFs and growing investor interest in cryptocurrencies. However, the market remains highly volatile, and today’s sell-off is believed to be driven by a combination of profit-taking and liquidations in the futures market.
Bitcoin’s surge to a new all-time high can largely be attributed to institutional investors who are investing in approved spot BTC ETFs. Data from CoinShares shows that institutional investors have invested $7.6 billion into crypto assets so far in 2024, with over $1.8 billion flowing into crypto investment products in the past week alone. Of the total amount invested in crypto assets, more than $7.3 billion has gone into Bitcoin specifically, making it the dominant digital asset with $62.71 billion in assets under management.
As Bitcoin’s price reached a new high, investor sentiment turned extremely greedy, as indicated by the Crypto Fear and Greed index, which reached a level of 90 on March 5, the highest seen since February 2021. Despite this extreme level of greed, Bitcoin’s price remains volatile, with open interest continuing to rise. The sharp movements in the Bitcoin futures market can be observed through liquidations, with a significant number of long positions being liquidated during the period of elevated volatility, causing the price to drop.
Within a 24-hour period on March 5, over $111 million worth of Bitcoin long positions were liquidated, with $35 million liquidated within just one hour of the BTC price reaching its all-time high. Some analysts believe that this may have been a new experience for those who recently entered the market.
In addition to institutional investments, retail investors have also shown increased interest in Bitcoin. For a brief moment on March 5, all Bitcoin on-chain addresses were in profit, a situation that had not occurred since the previous all-time high. This led investors to start realizing their profits, resulting in the second-largest profit realization of 2024, amounting to over $3 billion.
The combination of liquidations, profit-taking, and ongoing institutional inflows has contributed to the volatile price of Bitcoin today. It is important to note that this article does not provide investment advice, and readers should conduct their own research before making any investment or trading decisions.