Sudden Drop in Bitcoin Price Raises Concerns: What’s Next?

• The United States saw Bitcoin and the broader cryptocurrency market facing selling pressure as soon as it released the Producer Price Index (PPI) inflation data for February on Thursday, March 14.
• As the market awaits the Federal Open Market Committee (FOMC) meeting scheduled for March 20, traders are preparing for a potentially volatile weekend.
• Questions are arising about the possibility of a short-term market decline before a potential rally leading Bitcoin (BTC) to $150,000 by the end of the year.

Bitcoin price made a sudden drop to $68,000 earlier in the day: Will this drop change Bitcoin’s direction?

Bitcoin Price Takes a Dive in Early Hours

The United States saw Bitcoin and the broader cryptocurrency market facing selling pressure as soon as it released the Producer Price Index (PPI) inflation data for February on Thursday, March 14. At the time of press, Bitcoin, with a market capitalization of $1.342 trillion, was trading at a price of $68,260.195, representing a 6.95% decline.

As the market awaits the Federal Open Market Committee (FOMC) meeting scheduled for March 20, traders are preparing for a potentially volatile weekend. QCP Capital, a leading trading firm, reported an increase in perpetual swap open positions over the last 24 hours, indicating increased activity in the market.

In the short term, risk reversals for both Bitcoin (BTC) and Ethereum (ETH) are currently skewed towards call options, indicating cautious sentiment among investors. However, QCP Capital noted strong demand for year-end BTC call options with strike prices ranging between 100,000 and 150,000, signaling bullish expectations for the cryptocurrency’s performance by year-end.

Questions are arising about the possibility of a short-term market decline before a potential rally leading Bitcoin (BTC) to $150,000 by the end of the year. While perpetual funding rates and forward curves remain elevated, QCP Capital sees spot-forward spreads as an attractive opportunity for trading without risk, ranging from 20-30%.

Despite the potential for short-term selling pressure, analysts believe these fluctuations will not have a lasting impact on the overall upward trend, particularly with the continuous demand for daily spot BTC ETFs. Investors are closely monitoring market developments ahead of the FOMC meeting, which could further influence trading activity in the coming days.

Changing Market Sentiment

Data from Greeks.Live indicates a shift in the widespread narrative around ETF inflows, with a noticeable decline in implied volatility (IV) across all major periods in recent days. Additionally, a lack of clear directional bias in block option orders signals weakening market sentiment.

Market analysts noted that the current sentiment resembles a cooling-off phase historically following the start of a bull market, as reported by Greeks.Live. However, Bitcoin ETF daily inflows hit their lowest level in March on Thursday.

According to data from SoSoValue, March 14 saw significant movements in Bitcoin spot ETFs, with notable inflows and outflows. Grayscale’s GBTC ETF experienced a significant net outflow of $257 million in a single day. However, BlackRock’s IBIT ETF stood out, recording a notable net inflow of $345 million, contributing to its historical net inflow reaching $12.37 billion.