- On Friday, the crypto market experienced a downturn, slashing the global crypto market value by over 7% to $2.55 trillion.
- The market declined on Friday due to the expiration of over $3 billion worth of options for Bitcoin and Ethereum on March 15th.
- US Fed interest rate cuts will depend on new economic data such as inflation and unemployment, as stated by Jerome Powell in his testimony to Congress.
As Bitcoin price entered the final trading day of the week, it encountered a sudden drop: What factors are causing this decline? Here’s the answer!
Bitcoin and Cryptocurrency Prices Suffered a Sudden Shake-Up Today!
On Friday, the crypto market experienced a downturn, slashing the global crypto market value by over 7% to $2.55 trillion. Other altcoins, including Bitcoin (BTC) and Ethereum (ETH) prices, also dropped, alongside BNB, XRP, and Cardano (ADA).
Despite the rise of meme coins in recent days, Dogecoin (DOGE) and Shiba Inu (SHIB) prices also saw heavy sell-offs, dropping by 12%. Investors and analysts foresaw the expected need for necessary pullbacks after the Bitcoin halving for the market to surge further.
Options Expiry on Friday
The market declined on Friday due to the expiration of over $3 billion worth of options for Bitcoin and Ethereum on March 15th. The crypto market typically experiences significant volatility during option expiry.
In particular, the expiry of 30,568 BTC options, with a total notional value of $2.09 billion as of today, is expected. The put-call ratio is 0.79, with a maximum pain point of $66,000, indicating a scenario for profit-taking for option traders, yet still maintaining the bullish market. BTC price experienced a drop to $66,770, still higher than the maximum pain point, presenting a buying opportunity for Bitcoin dip.
Meanwhile, the expiry of 332,094 ETH options, with a total notional value of $1.24 billion, is expected, with a put-call ratio of 0.69. The maximum pain point is $3,550. Traders are particularly bullish on Ethereum, yet they made profits above the maximum pain point. ETH price rose to $3,748 after a 24-hour drop to $3,656.
Diminished Hope for Fed Rate Cuts
US Fed interest rate cuts will depend on new economic data such as inflation and unemployment, as stated by Jerome Powell in his testimony to Congress. Following higher CPI data earlier this week, high PPI, retail sales, and unemployment figures indicate higher inflation and resilience of the US economy. This provided more reasons for the Fed to likely postpone interest rate cuts until the end of the year. The likelihood of keeping interest rates steady in March and May is quite high.
CME FedWatch data shows a 54% probability of a 25 basis point rate cut in June and a 47% probability in July. The US stock market dropped after the latest data, and US equity futures and global stock markets fell today due to market volatility and uncertainties.
The US dollar index (DXY) rose from 102.85 to 103.40, marking its first gain in four weeks. Furthermore, the US 10-year Treasury yield rose for the fourth consecutive day to 4.28%, its highest level since the beginning of the month, as hot PPI data reduced optimism about potential Fed rate cuts this year. Fed funds now signal less than three rate cuts this year.
Liquidation of Crypto Assets Due to Liquidity Purge
The crypto market lost over $680 billion in market value recently due to liquidations. According to Coinglass data, over 192,000 traders were liquidated in the past 24 hours, and the largest single liquidation order, worth $13.30 million, occurred in the BTC-USDT swap on the OKX crypto exchange.
Approximately $543 million worth of long and $137 million worth of short positions were liquidated, with Bitcoin and Ethereum accounting for over $242 million and $115 million, respectively. This caused the crypto market to bleed, but it also presented a buying opportunity for dip buyers.
Popular analyst Michael van de Poppe predicted a short-term liquidity purge in the rally before the Bitcoin halving. Lower timeframe bearish divergences seem valid, and buying the dip for altcoins is recommended.
Slow Entry into Spot Bitcoin ETFs
Entries into the US Spot Bitcoin ETF dropped by 80.6% to $133 million due to weakening Wall Street sensitivity to new economic data, according to CoinOtag reports. It marked the lowest entry in the past eight trading days.
Investors took inspiration from the decline in gold and equity markets as they exited Grayscale’s GBTC ahead of the halving peak. GBTC recorded an outflow of $257.1 million on Thursday.
