Recently, Tether, the world’s largest stablecoin issuer, made a significant purchase of Bitcoin, acquiring 8,888 BTC on March 31. This move has stirred up discussions within the crypto community as to why Bitcoin’s price has dipped despite such a bullish development. Tether now holds nearly 75,400 BTC, ranking it among the largest Bitcoin holders globally. However, the unexpected drop in Bitcoin’s price below $70,000 following this purchase has led to speculations on the factors influencing market sentiment and causing the decline.
Impact of Liquidations and Spot Bitcoin ETFs
According to insights from crypto trading firm QCP Capital, Bitcoin’s price broke below $70,000 and dropped to as low as $66,000 due to large liquidations on retail-heavy exchanges like Binance. The firm noted that perp funding rates on these exchanges went from as high as 77% to flat, indicating a significant shift in market dynamics. Additionally, Spot Bitcoin ETFs, particularly Grayscale’s GBTC, have been experiencing significant outflows, with GBTC witnessing an outflow of $302.6 million on April 1. These outflows have contributed to the combined net outflows of $85.7 million recorded by Bitcoin ETFs, adding to the selling pressure on Bitcoin.
Derivatives Market Activity
Activity in the derivatives market has also played a role in influencing bearish market sentiment. Data from Coinglass shows that $409 million has been liquidated in the market in the last 24 hours, with $328 million in long positions getting wiped out during this period. This trend indicates that bears are currently in control of the market sentiment, leading to increased selling pressure on Bitcoin.
Tether’s purchase of Bitcoin, although significant in terms of the amount acquired, has not had the expected bullish impact on Bitcoin’s price. Various factors such as liquidations on retail-heavy exchanges, outflows from Spot Bitcoin ETFs, and bearish sentiment in the derivatives market have contributed to the recent price decline in Bitcoin. It is essential for investors and traders to consider these market dynamics and conduct thorough research before making investment decisions in the volatile cryptocurrency market.