Because of a sudden shift in market sentiment that led to a wave of liquidations, the price of bitcoin is currently declining.

Less than a day before the eagerly anticipated Bitcoin halving event, on March 22, the price of Bitcoin (BTC) plummeted to an intraday low of $62,570.

Although the price of bitcoin is 5.6% below the daily opening at $65,466 on March 14, the bullish momentum that drove the cryptocurrency towards a new all-time high of $73,835 on that day appears to be fading.

In addition to the effect of ongoing withdrawals from spot Bitcoin ETFs on the value of BTC, the leading cryptocurrency is also dealing with the stronger U.S. dollar.

Let’s examine the variables influencing the price of Bitcoin right now in more detail.

The robust rebound of the U.S. currency

Following robust economic statistics from the U.S., the U.S. dollar index (DXY), which measures how the U.S. currency performs versus the world’s major currencies, has increased 1.3% from its low of 102.79 on March 21 to its current value of 103.97.

Data from PMI surveys show that the DXY required a tailwind to start a recovery, and that tailwind came from sustained private sector economic activity and increasing input price pressure.

The Initial Jobless Claims declined to 210,000 in the week ending March 16; this decline has also been linked to the dollar’s recovery.

Technically speaking, the U.S. dollar index is on course to increase by more than 0.6% to finish a traditional V-shaped recovery pattern that will lead to highs over 104 in 2024.

Spot Bitcoin ETFs have negative flows for four days in a row.

The spot Bitcoin exchange-traded funds (ETFs) saw capital outflows for the fourth day in a row on March 21, the longest run since the ETFs started trading on January 11.

On March 21, BitMEX Research data shows that more than $538.8 million worth of Bitcoin left Grayscale’s GBTC. $233 million was invested in BlackRock’s IBIT on what was the fund’s second-largest day of the week. Inflows into Fidelity’s Bitcoin ETF, FBTC, came to just over $2.9 million. As a result, spot Bitcoin ETFs saw a net outflow of $93 million.

According to BitMEX research,

“We have now experienced net outflow days for four days in a row.”

Large GBTC outflows have been attributed to ongoing net outflows from Bitcoin ETFs and the selling pressure on BTC. Many investors who had their money in GBTC before its conversion to a spot ETF are now selling it or switching to less expensive alternatives.

Long-term Bitcoin liquidations are increasing.

A sudden move in the Bitcoin futures market has caused the rapidity of today’s price drop. The lengthy liquidations took place at the same time that the price of the original cryptocurrency fell precipitously.

Over the past day, more than $53 million worth of long Bitcoin positions have been liquidated, according to data from Coinglass. A total of $250 million was liquidated in the cryptocurrency market; $173 million of those liquidations were lengthy.

Long liquidations usually happen when the asset being traded has a sharp decline in value. This is because traders who initiated long positions because they were bullish on the asset now suffer losses because the market has moved against them.

Analytics from blockchain analytics and intelligence platform Glassnode indicate that on March 21, there was a surge in the quantity of Bitcoin sent to exchanges.

More significant selling pressure in the market is indicated by greater exchange inflows for a specific asset.

The present price decline can be explained by investors appearing to be taking profits at the current rates, as more Bitcoin is being sent to well-known exchange accounts.