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Bitcoin (BTC) price is showing shocking volatility today by correcting by 7% after rallying to a new all-time high of $69,324 at Coinbase exchange. While Bitcoin’s price has benefitted from the vast inflows to the spot BTC ETFs and increasing investor interest in cryptocurrencies, it remains volatile and today’s sell-off is thought to be driven by a mix of profit-taking and liquidations in the futures market.
Let’s look into the reasons why Bitcoin price is volatile today.
ETFs open the door for major institutional investor inflows
Bitcoin’s new all-time can largely be attributed to institutional investors investing in approved spot BTC ETFs.
According to CoinShares data, institutional investors pushed $7.6 billion into crypto year to date in 2024. In the past week, over $1.8 billion flowed into crypto investment products by institutional investors.
Of the $7.6 billion pushed to crypto assets in 2024, over $7.3 billion has flowed to Bitcoin specifically. The total assets under management (AUM) for Bitcoin dwarfs other digital assets, with $62.71 billion currently deployed.
Related: The DeFi bots pumping Solana’s stablecoin volume
Spot BTC ETF momentum boosts market sentiment
As Bitcoin’s price reached an all-time high, investor sentiment turned to “extreme greed,” as measured by the Crypto Fear and Greed index. The level of greed on March 5 hit 90, making it the highest seen since February 2021.
JUST IN: Crypto Fear & Greed Index hits a value of 90 for the first time since February 2021. pic.twitter.com/lvuy4BJjLs
— CoinGecko (@coingecko) March 5, 2024
Despite the extreme level of greed, Bitcoin price remains volatile, with open interest increasing.
A sharp movement in the Bitcoin futures market can be noted by looking at liquidations. The timing of the long liquidations coincided with the elevated volatility, which sharply drove Bitcoin price down.
In a 24-hour period on March 5, over $111 million of Bitcoin long positions were liquidated. Bitcoin long liquidations reached $35 million within 1 hour of BTC price reaching all-time highs.
Some analysts remarked that this may have been a new event for those recently joining the market.
All time highs for #Bitcoin!
— Jacob Canfield (@JacobCanfield) March 5, 2024
(Then everyone got liquidated)
Welcome to #crypto. pic.twitter.com/ssVpz7HHCj
Related: Bitcoin just had its best day ever — Is $100K BTC price programmed?
Retail investors’ interest in Bitcoin increases
For a brief moment on March 5, all Bitcoin on-chain addresses were in profit, which has not happened since the previous all-time high.
With all Bitcoin addresses outside of losses, investors began to realize profits. On March 5, the second largest profit realization took place for 2024, reaching over $3 billion.
The spike in liquidations and profit-taking mixed with continued institutional inflow created a volatile Bitcoin price today.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
