Bitcoin has attracted attention on Tuesday due to a significant decline. The price of Bitcoin fell below the $66,000 mark, after several days of holding above $69,000.
This has raised concerns about further price declines. However, crypto analysts believe that a 30% correction in the price of BTC could occur within the bullish trend.
Bullish correction of 30% in Bitcoin price
Ali Martinez, a well-known crypto analyst, made a bold statement regarding the correction in Bitcoin prices. In his message, he noted: "A 30% price correction is the most bullish thing that could happen to Bitcoin."
When network users asked the analyst about this comment regarding the trajectory of BTC price, Martinez emphasized the importance of liquidity. He noted that the correction in Bitcoin price would help "market makers grab liquidity." Ultimately, this could lead to an increase in the value of BTC to a new all-time high.
Furthermore, in another post, Martinez highlighted a critical level for the recovery of Bitcoin price. He closely monitors the critical support level on the four-hour chart—the 200-period exponential moving average (EMA). Since the beginning of February, this level has been a significant barrier to further BTC price declines.
The expert emphasized the importance of this level, believing that its ability to hold could pave the way for a substantial recovery in the price of Bitcoin. However, a drop below the support level, similar to what happened in mid-January, could lead to significant losses for the Bitcoin price.
While this could lead to a massive correction in BTC price, in the long run, it could also be a bullish factor. The pullback could provide a better entry point for new investors, leading to increased liquidity, according to Martinez's forecast.
Bitcoin price crash
The price of Bitcoin dropped by 5.66%, reaching $65,776.07 on Tuesday, April 1st. The cryptocurrency's market capitalization was $1.29 trillion. Over the past 24 hours, BTC trading volume increased by 74.04% to $45.68 billion.
The recent BTC pullback may be explained by massive liquidations of long positions recorded on Tuesday. According to Coinglass data, the liquidation of long positions amounted to $108.78 million out of a total of $149.54 million. Meanwhile, traders trading short positions took advantage of the opportunity to profit.
Experts note the first signs of an impending downturn in the options market, particularly a shift towards reduced risk. Options for Bitcoin and Ethereum maintain increased volatility amid growing selling pressure amidst weakened sentiments.
The sudden crash was accelerated by massive liquidations on cryptocurrency exchanges, often frequented by retail investors. On Binance, perpetual funding rates dropped from 77% to a neutral level.
This led to a decline in spot prices to the risk level observed in mid-March around $63,000. Additionally, the reduction in trading volumes suggests a possible further decline in prices in the future.
Liquidation of long positions
The main reason for today's Bitcoin price drop is associated with the liquidation of long positions. Prior to the drop, the open interest (OI) weighted funding rate for Bitcoin was unusually high. This indicates that leveraged traders were paying a premium to maintain long positions in anticipation of future price increases. However, this optimism made the market vulnerable to sudden corrections.
Coinglass data shows that over the past 24 hours, 120,569 investors were liquidated. The total liquidation amount was $395 million, of which $311.97 million was attributed to long positions. The liquidation of long positions in Bitcoin amounted to $87.42 million.
DXY puts pressure on Bitcoin
The DXY, which closed on Monday at 105.037, its highest level since November, demonstrates the strengthening of the U.S. dollar.
Considering Bitcoin's inverse correlation with the DXY, the strengthening dollar may be causing investors to shy away from risky assets such as Bitcoin in favor of safer ones.
Profit-taking by traders
Significant profit-taking by investors also played a role in the recent price correction. The Checkonchain platform, which analyzes activity on the Bitcoin network, noted an increase in profit-taking activity.
Profit-taking sales came at the peak of $73,000 per Bitcoin, indicating a high level of profit realization: more than 352,000 BTC were sold. Such selling behavior is typical for bull markets, but it plays a significant role in forming resistance levels at local price peaks.
Outflow from Bitcoin ETFs
The market has also witnessed significant outflows from Bitcoin ETFs, indicating a shift in the direction of substantial fund inflows last week. Grayscale's GBTC experienced the most significant outflow—$302 million, with a total outflow reaching $85.7 million in a single day.
Meanwhile, IBIT Blackrock and FBTC Fidelity reported positive inflows of $165.9 million and $44 million, respectively. Analysts note that overall, the day was unsuccessful but not as bad as the price suggests.
Profit-taking at the end of the first quarter makes sense. Some confusion is expected with the new quarter and the upcoming halving.
