Key Points
- Bitcoin experienced a sharp correction, triggering liquidations worth $200 million from the entire crypto market.
- The market sentiment is one of “extreme greed”, which could accelerate buying pressure on Bitcoin.
Bitcoin [BTC] saw a sudden correction during early Asia hours on Tuesday, dropping by 5.7% to as low as $66,000.
This unexpected downturn resulted in liquidations worth $200 million from the entire crypto market in the last four hours. Long positions made up about 83% of the total liquidations.
Effects on BTC Derivatives Traders
The drop also led the majority of BTC derivatives traders to adopt a bearish stance on the asset. The Long/Shorts Ratio fell sharply below 1 in the last few hours, indicating a sharp increase in bearish leveraged positions.
This decline followed a weak start to the week for Bitcoin spot exchange-traded funds (ETFs).
Reaction to U.S. Manufacturing Data
Ten new investment avenues, tracking spot prices of the world’s largest digital asset, saw net outflows of $85 million on the 1st of April. The downward pressure was also a response to stronger-than-expected U.S. manufacturing sector data.
Typically, risk-based markets such as cryptocurrencies and equities interpret such events as a lower likelihood of the U.S. Federal Reserve cutting interest rates. Wall Street’s main indices like S&P 500 and Nasdaq Composite also slipped lower on this development.
The crypto market generally becomes “significantly volatile” in the lead up to Bitcoin’s halving, said Shivam Thakral, CEO of Indian cryptocurrency BuyUcoin. Hence, participants could prepare for more ebbs and flows over the next two weeks.
The market sentiment was one of “extreme greed” at press time, according to Hyblock Capital’s data. This could accelerate buying pressure in the days to come, helping Bitcoin push further north.
