In fast downward action, Bitcoin (BTC) plummeted to a low of $65,110 on Friday after briefly testing the $71,000 barrier. At press time, Bitcoin had bounced back to $67,553, down more than 5% over the past 24 hours.
Bitcoin’s recent price crash from $71,000 to $65,000 surprised the cryptocurrency market, but based on on-chain data, this downturn was not entirely unexpected.
Crypto research firm Kaiko tweeted on April 11 that expectations for near-term volatility were increasing. This is because implied volatility for expiries in the following two weeks jumped from 59% to 71% in just two days.
Aside from that, two key indicators had been flashing warning signs, hinting at the impending correction before it unfolded.
According to on-chain analytics firm CryptoQuant, these indicators have signaled weakness since late March but might have been disregarded because of market exuberance.
$BTC recently dropped from $71k to $65k.
If the correction persists, keep an eye on key metrics like traders’ unrealized profit margins and the realized price.
These have signaled weakness since late March. pic.twitter.com/QbGuEuexd1
— CryptoQuant.com (@cryptoquant_com) April 12, 2024
The key metrics, traders’ unrealized profit margins and the realized price, have signaled weakness since late March. In this light, CryptoQuant urges the crypto community to keep an eye on these metrics if the current market correction persists.
As Bitcoin saw its first drop below $66,000 since April 4, liquidations since the past day have reached a whopping $920 million. According to Santiment, S&P 500 and gold prices have also retraced alongside cryptocurrencies, suggesting CPI and inflation concerns are being revealed across sectors.
Market transitions into euphoric phase
According to the most recent Glassnode report, the market has transitioned into a euphoric phase, as profit-taking has climbed accordingly.
Compared to previous cycles’ ATH breaks, it might be argued that the current euphoria phase (market in price discovery) is still relatively early. Previous euphoria stages have seen multiple price drops of more than -10%, with the majority being significantly deeper, with 25% being the norm.
At current pricing, Bitcoin is down 8.32% from its all-time high of $73,750 set in mid-March.
