Bitcoin extended its slide on Tuesday, dropping more than $10,000 at one point from its all-time high last week.
The flagship cryptocurrency was last lower by 4% at $64,440.14, according to Coin Metrics. Earlier it fell to as low as $62,320.30, after reaching a record of $73,797.68 last week.
“As ETFs buy up available supply of bitcoins on the open market and continue to reduce liquidity, these occurrences could become more frequent, and might cause people to lose faith in the integrity of bitcoin pricing and start looking further afield” to other crypto assets, said Bartosz Lipiński, CEO of Cube.Exchange.
Bitcoin drops below $63,000
The move helped drag other cryptocurrencies lower. Ether lost more than 4% and was recently trading at $3,335.66, after topping $4,000 last week for the first time since December 2021 — a drop some analysts predicted following the network’s Dencun upgrade. The token tied to Solana fell 8% and dogecoin lost 5%.
Crypto-related stocks cut earlier losses but remained under pressure. Bitcoin proxy MicroStrategy tumbled 5%, while crypto exchange Coinbase fell 4%. Mining stocks were initially down across the board, but some turned positive. The biggest ones, Riot Platforms and Marathon Digital, lower by 3% and 0.5%, respectively.
“Overall, it would make sense for this pullback to be short-lived and for the rally to resume — though the spector of a recession next year looms over markets and could temper the rally in ways we may not be able to foresee,” Lipiński said.
Bitcoin weakness began last week as traders started taking profits after it had soared roughly 70% from the start of the year to its peak last Wednesday. Data from CryptoQuant shows a massive spike in short-term holders selling their bitcoin at a profit on March 12.
Additionally, that profit-taking led to a spike in long liquidations of leveraged bitcoin positions. About $145 million in long liquidations have occurred in across centralized exchanges over the past 24 hours and $122 million on Monday, according to CoinGlass. Last week, there was about $372 million in long liquidations from Wednesday to Friday.
The successful introduction of spot bitcoin exchange-traded funds in the U.S. earlier this year has been a key contributor to bitcoin’s rally, which began even before the ETFs were launched in anticipation of their regulatory approval. At the same time, interest from investors and higher demand for bitcoin have also led to increased leverage and heightened high-frequency volatility.
Investors and analysts have warned that traders should exercise caution in March as more volatile price action, combined with an increase in trading volumes, would lead to pullbacks from bitcoin’s long-term uptrend.
Chart watchers have mostly said bitcoin is on a path to new highs but could also see steep corrections along the way.