Volatility spiked for crypto traders on Wednesday as Bitcoin (BTC) surged to a 27-month high above $64,000 near midday, only to flash crash to a low of $58,330 an hour later, ruining the plans of derivatives traders as positions on both sides of the equation suffered heavy liquidations.
Data provided by Coinglass shows that over the past 24 hours, a total of $700 million in derivatives positions have been liquidated, with shorts seeing $367.7 million in losses while longs relinquished $333.04 million.
While the crypto bull market shows no signs of slowing down, stocks struggled to regain their recent momentum as investors await tomorrow’s PCE report to get a better picture of the state of inflation, which will provide insight into the Federal Reserve’s next move regarding interest rates.
At the market close, the S&P, Dow, and Nasdaq all recorded losses, finishing down 0.17%, 0.06%, and 0.55%, respectively.
Data provided by TradingView shows that after trading near support at $57,000 in the early hours on Wednesday, Bitcoin rallied above $59,000 over two hours, consolidated for roughly three hours, and then resumed its uptrend. The afternoon saw a blow-off top surge followed by a flash crash – in what amounts to a seven-hour whipsaw – with BTC showing signs of stabilizing near $60,000 at the time of writing.
BTC/USD Chart by TradingView
$100k Bitcoin is realistically on the table
With Bitcoin outperforming the expectations of even the most bullish crypto investors, analysts are now scrambling to update their 2024 outlook, as BTC looks poised to hit a new all-time high before the halving on April 19 or 20, the first time the top crypto will have achieved such a feat.
“Our analysis forecasts a conservative price objective of $100,000-$120,000 to be achieved by Q4 2024, and the cycle peak to be achieved sometime in 2025 in terms of total crypto market capitalization,” said analysts at Bitfinex. “The ETFs have introduced ‘passive demand’ which means demand is coming from investors that is largely price agnostic. They perceive Bitcoin as a store of value rather than a tradable volatile asset, which has been the case for several years before the introduction of the ETFs.”
Addressing Bitcoin’s history of 80% corrections following bull market tops, Bitfinex said, "The fact we now have ETFs potentially means that any decline following the top of the current cycle could be less drastic than previous downturns.”
“We saw a similar stable trajectory in price after a huge increase following the launch of gold ETFs,” they noted. “However, from an investment perspective, it is advisable to assess the situation and various futures and on-chain market metrics once we get to the end of the cycle, to take a more definitive view."
While some analysts who are unfamiliar with crypto bull markets have warned that Wednesday’s price action marks the top for this cycle, market analyst TecDev posted the following chart highlighting that “#Bitcoin broke above the 7W supertrend,” which has historically been a bullish indicator.
“Historically, the candles that followed brought mania,” TecDev said.
As for the mania that usually follows, signs are emerging that this bull market could behave in a manner that no analysts can yet fathom as the FOMO that typically exists during bull cycles is being amplified by the arrival of institutions, who finally have an easy way to invest in Bitcoin after sitting on the sidelines for 15 years.
According to Bloomberg Intelligence Senior ETF Analyst Eric Balchunas, “The trading explosion is spilling into the Bitcoin futures ETFs as well, check out $BITX, the 2x BTC futures smashing its volume record w 3hrs to go still... $BITO and $BITI also headed towards record days. All told, [there are] Nine BTC ETFs in [the] Top 100 most active, totaling $6.7b. For context, Apple has traded $4.5b.”
“Spilling into stocks too,” Balchunas said in a follow-up tweet. “Microstrategy [is] also into record volume territory today $MSTR. Fidelity, Bitwise, Invesco, [and] ARK's BTC ETFs have all broken their personal volume records today, too and it's not even 1 pm. To quote Buffalo Springfield, ‘There's something happening here…’”
Something is indeed happening as data provided by Dune Analytics shows that all the ETFs combined, including GBTC, now hold 746,571 BTC worth approximately $45 billion at the time of writing, with Bitcoin trading at $60,300.
With data from VettaFi showing that the 19 U.S.-listed gold ETFs holding $92.1 billion in assets under management, the Bitcoin ETFs now hold nearly as much value as gold ETFs after only 32 days of trading. While GBTC had an 11-year head start on accumulating BTC, it's undeniable that the demand and inflows to the ETFs have been stellar, and this is before registered investment advisors have really started pitching the Bitcoin ETFs to their clients.
iShares Bitcoin ETF has eclipsed $8bil in assets in < 7 trading weeks...
It's my belief the vast majority of advisors & inst'l investors haven't even begun allocating to these products yet (partially b/c many large platforms have yet to approve access).
Unreal success.— Nate Geraci (@NateGeraci) February 28, 2024
Mixed day in the altcoin market
It was a mixed bag performance-wise for altcoins as the spike in volatility took a toll on many of the tokens in the top 200, resulting in a majority recording losses on Wednesday.
Daily cryptocurrency market performance. Source: Coin360
Arweave (AR) and Theta Fuel (TFUEL) benefited from the building momentum around the DePIN narrative, gaining 47.5% and 26.75%, respectively, to lead the field, while Arkham (ARKM), JasmyCoin (JASMY), and Aptos (APT) climbed 25%. Memecoin (MEME) was the biggest loser, falling by 14.2%, while ZetaChain (ZETA) and Ondo (ONDO) declined by 11%.
The overall cryptocurrency market cap now stands at $2.24 trillion, and Bitcoin’s dominance rate is 53.6%.
