Bitcoin’s 5-second high was followed by a sharp correction. What’s the reason behind it?

Original title: "Falling down 15% immediately after a new high. Is the market peaking or is it a bull market correction? 》

Original author: Frank, Foresight News

"Bitcoin no longer owes anyone any more", which only lasted less than 5 seconds?

Witness history and remember history, both on the same night: 23:00 on March 5, 2024,Bitcoin regains its position after 3 years 69,000 USDT (OKX spot data, the same below), reaching a maximum of 69,080 USDT, surpassing 69,040.1 USDT on November 10, 2021, setting a record high.

However Unlike the smooth ride after breaking through the $20,000 mark in 2020, this time Bitcoin did not make a big push after reaching a new high, but instead turned to a sharp decline - the flash drop was fierce and the decline was large. Today It touched as low as 59,000 USDT at 3:55 am, falling more than 14.5% in 5 hoursand currently rebounds to around 63,600 USDT.

At the same time, Ethereum fell from a high of 3821 USDT to a low of 3179 USDT in the early morning, and the drop was as high as 16.8%. The altcoin market is also a river of blood. Except for L2/new public chain currencies such as STRK and APT, which are strong, the rest of the corrections are more than 10%.

Coinglass data shows that in the past 12 hours, more than 900 million US dollars have been liquidated across the entire network, of which 753 million US dollars have been liquidated for long orders, accounting for more than 83%. It is completely a one-way massacre targeting multiple armies. The "hot market" passively completed a wave of leverage clean-up.

Plummet What's the reason?

"Look at the house and the car before going to bed, and look at the building and the sea when you wake up." If you analyze the possible reasons for the sudden drop immediately after this new high, you will find that Whether it is the macro spillover of the US stock market, or internal factors such as huge transactions of its own ETFs and abnormally high funding rates, they may have combined to trigger this sharp correction.

U.S. stocks plummeted

Nowadays, Bitcoin, which is increasingly a risky asset, is increasingly closely related to U.S. stocks.

On the U.S. stock market overnight on Tuesday, the three major U.S. stock indexes all fell. In particular, the plunge in blue-chip technology stocks caused the Nasdaq to fall by more than 2% during the session, setting a new record. It has closed at a new low since February 21, and when Bitcoin hit a new high at 23:00 last night, the Nasdaq had opened down more than 1%, and the risk began to appear at that time.

Update The long-term signal worth paying attention to is that the overall rally of chip stocks, which are regarded as the "mainstay" of the US stock market and have outperformed the market in recent days, has stalled. This will undoubtedly make the market worry about whether the AI craze can continue to act as a "stimulant for US stocks", which to a certain extent This has raised market expectations for a subsequent correction in U.S. stocks, influencing many profit-making funds to choose to avoid risks and carry out liquidation or leverage reduction operations.

ETF Huge Transactions

It is worth noting that Bloomberg ETF analyst Eric Balchunas said ,Yesterday, the total trading volume of the 10 Bitcoin spot ETFs reached US$10 billion, which was approximately 5 times the recent average daily trading volume, a record high.

Significantly Higher-than-average daily trading volume also represents a high turnover rate, and this situation of volatility and trading volume going hand in hand also shows to a certain extent that under the violent market fluctuations,some users are uncertain about future trends Sexual and risk aversion sentiments are intensifying, and some early chips choose to take profits in advance.

The funding rate is abnormally high

The crypto market is under heightened emotions Its own early warning has been sounding for nearly a week.

Previously on February 27, when Bitcoin reached a new high, the Foresight News market observation article mentioned that the most direct risk signal in the crypto market began Accumulation - The perpetual contract funding rate of BTC and ETH jumped to an extremely high level of about 80% starting at 8:00 on February 27 - the continuous expenditure of long positions is equivalent to the annual 80% of the huge capital fees (see "Bitcoin's "New RMB High" is Coming, Is the Crypto Market Entering the Moment of Making Money?").

However, the market enthusiasm was beyond imagination. In the following week, the perpetual contract funding rates of BTC and ETH remained high, basically maintaining a high range of 50%-70%.

On the day when the plunge began on February 5, the rates of BTC and ETH hit an abnormally high level of nearly 100%, which meant that bulls While heavily subsidizing the short position, one continues to pay large long costs and lose blood.

Therefore, no matter how determined the bullish bulls are, they are not the opponent of time. Once the front line is lengthened, they may be forced to close their positions quickly at any time. If the bulls are the first to close their positions and run away, it will trigger a stampede of dominoes and lead to a large-scale liquidation of leverage.

Ancient whale selling?

In addition, Bitcoin News tweeted after the crash that a large number of Bitcoins mined by an ancient whale address from August to October 2010 seemed to be The new high was followed by a sell-off, "resulting in Tuesday's price correction."

However, according to CryptoQuant statistics, Bitcoin, which has been dormant for more than 10 years, has been moving before hitting new highs, and the intensity of the sell-off of only tens of millions of dollars seems to be Not enough to send the market plunging more than 15%.

Is the market peaking or a bull market? Callback?

"Three years ago, I was trapped in 69,000 USDT. Three years later, before I had time to unwind, I was trapped in 69,000 USDT again."

I believe everyone’s biggest doubt now is whether this sharp decline is a sign of the market peaking, or is it a regular correction of "bull markets often plummet"?

We can still comprehensively examine the current news and financial factors to help us obtain a more objective judgment on the market outlook.

Continued inflows of ETFs and micro-strategies

The primary factor is still a cliché, and for Bitcoin In terms of investment, the largest incremental capital inflow at present is undoubtedly spot ETF.

As of March 4, the total net asset value ofBitcoin spot ETFs was US$52.45 billion, and the ETF net asset ratio (market value compared to the total market value of Bitcoin) ratio) reached 3.96%, and the historical cumulative net inflow has reached US$7.91 billion.

In addition, MicroStrategy announced again yesterday that it plans to A non-public offering of US$600 million in principal amount of convertible senior notes due 2030, with net proceeds planned to be used to purchase additional Bitcoin and for general corporate purposes.

Market rates fell sharply

As mentioned above, the permanent growth rates of BTC and ETH in the previous week were mentioned above. Funding rates for contract renewals are at abnormally high levels, and the sharp drop last night and this morning is equivalent to a timely cooling, allowing the market to return to rationality from the FOMO sentiment.

At least in terms of data, the current funding rate of BTC has dropped significantly to 24.85% annualized (still slightly higher than 10% a month ago), which is overwhelmingly The funding rates of some altcoin trading platforms have also fallen back to the normal level of 0.01%, releasing the market's contract leverage risk.

Yesterday's "Bitcoin’s new high is coming soon, let you find the “wealth password” from these 10 pictures” also mentioned in the article, “Bitcoin leads the market, and the altcoin Summer will arrive later, and it is expected that There will be big corrections - there were 6 corrections of more than 30% in the last bull market cycle."

History will not simply repeat itself, but it will always follow the same rhyme. Although this crash is fierce, it can be regarded as releasing certain risks in advance. Stay tuned for further developments.

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