Bitcoin Experiences Sharp Decline Following ATH at $69,000

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Bitcoin Surges to $69,000

Bitcoin reached a new all-time high, marking a significant milestone after more than two years. However, this record-breaking moment was short-lived as numerous traders seized the opportunity to secure profits.

In a rapid ascent, the cryptocurrency surged by 2.5 percent, reaching US$69,191.95. Shortly thereafter, it swiftly reversed course, experiencing a 14 percent plunge, ultimately settling at US$59,317.16. The founder of crypto fund Split Capital, Mr. Zaheer Ebtikar, noted, “Given that nearly every Bitcoin holder is now in a profitable position, there is a likelihood of witnessing some profit-taking.”

The volatile fluctuations on March 5 exemplified the inherent boom-and-bust nature of Bitcoin. The recent upswing had been fueled by optimistic positions in the derivatives market, where leverage of up to 100 times the size of positions was possible in products like perpetual futures. As Bitcoin retraced its early gains, over US$800 million (S$1 billion) worth of bullish positions were swiftly liquidated in the perpetual futures market, according to crypto data tracker Coinglass.

Bitcoin has undergone a remarkable resurgence in 2024, propelled by robust demand from new US exchange-traded funds (ETFs) and anticipation surrounding a reduction in the token’s supply growth. By March 5, Bitcoin had surged approximately 63 percent in 2024, surpassing global stocks and instilling optimism throughout the digital asset market.

In a paradoxical turn of events, Bitcoin’s resurgence can be largely attributed to a regulatory body that was traditionally perceived as antagonistic toward cryptocurrencies: the United States Securities and Exchange Commission (SEC). The SEC’s approval of spot-Bitcoin exchange-traded funds in early January, following a legal setback in 2023, has played a pivotal role in broadening the accessibility of Bitcoin to the mass market. This development marks a significant shift for the crypto sector, which had been grappling with a bear market in 2022 and a series of subsequent failures, including the collapse of Sam Bankman-Fried’s FTX exchange.

Bitcoin Spot ETF Sets Record

🚨 RECORD trading volume for Bitcoin ETFs on 3/5 🔥$IBIT over $3.7 Billion, $GBTC $2.8B, $FBTC > $2.0 Billion pic.twitter.com/fYH6e7OqKA

— HODL15Capital 🇺🇸 (@HODL15Capital) March 5, 2024

A substantial influx of funds has flowed into the ETFs issued by heavyweight investment firms such as BlackRock and Fidelity Investments. With a net inflow of nearly US$8 billion in less than two months, this surge coincides with an impending reduction in Bitcoin’s supply growth, known as the halving, further fueling bullish sentiment.

“Breaking all-time highs, coupled with the ongoing momentum in spot ETFs and the impending halving narrative, is likely to induce true Fomo – fear of missing out – among participants who have been observing markets from the sidelines,” commented Stefan von Haenisch, the Head of Trading at OSL SG.

The resurgence of Bitcoin, initiated in early 2023, has propelled the overall market value of digital assets to approximately US$2.6 trillion. This revival from a low point in November 2022 marks the culmination of a transformative journey for the industry, which has undergone an irreversible transformation from a bust to a boom cycle.

“The recent Bitcoin all-time high signals a pivotal moment for the cryptocurrency landscape,” remarked Nathan McCauley, Chief Executive and Co-founder of Anchorage Digital. “Once sidelined, traditional institutions are now actively participating as key drivers in the crypto bull market.”

Bitcoin had previously reached its peak at US$68,991.85 on November 10, 2021, buoyed by the global deployment of monetary and fiscal stimulus measures to counter the impact of Covid-19. This rally was, in part, fueled by crypto purists known for their steadfast “HODL” mantra, originating from a misspelling of “hold” and adopted as an acronym for “hold on for dear life.”

However, what some initially hailed as the ultimate coming-of-age moment for crypto in 2021 turned out to be the commencement of a challenging reckoning. Following its 2021 high, Bitcoin, along with the broader crypto markets, embarked on a steep decline as central banks adopted a hawkish stance to combat escalating inflation. By the end of 2021, Bitcoin’s price had plummeted by almost a third from its peak.

The ensuing bear market exposed widespread fraud and imprudent risk-taking within key players in the crypto space, exemplified by the implosion of the TerraUSD stablecoin and the collapse of Bankman-Fried’s FTX exchange and associated entities. Regulatory scrutiny intensified on Binance, the largest digital-asset exchange, and its founder Zhao “CZ” Changpeng.

Bankman-Fried and Zhao currently await sentencing in the US on criminal charges. Meanwhile, Do Kwon, the creator of TerraUSD, who was imprisoned in Montenegro in 2023 for traveling with a fake passport, is contesting extradition to the US, where he faces fraud charges.