(Kitco News) – The cryptocurrency market correction intensified overnight as Bitcoin (BTC) bears overwhelmed bull support at $67,000 and pounded the top crypto to a low of $62,460. Bulls remain on the ropes at the time of writing, with bears now looking to take out support at $62,000 on their way to a sub-$60,000 BTC price.
BTC/USD Chart by TradingView
Altcoins were hit even harder, with many high flyers down 20-40% from their recent highs as crypto traders take profits en masse and wait for the dust of this correction to settle.
Data provided by Coinglass shows that longs have been the biggest losers from this pullback, as the relentless climb by Bitcoin over the past three weeks had many traders thinking it was “up only” for the foreseeable future, which is usually when major corrections take place in crypto land.
The broad pullback comes as the Monday flows into the spot Bitcoin exchange-traded funds (ETFs) were negative for the first time since March 1, largely due to $642.5 million in outflows from Grayscale’s GBTC, its largest one-day outflow on record.
We've got a negative flow day for the Cointucky Derby #Bitcoin ETFs thanks to $GBTC's $643 million outflow day pic.twitter.com/scmVgmwtiH
— James Seyffart (@JSeyff) March 19, 2024
Data provided by Farside shows that GBTC has now seen a total of more than $12.4 billion in outflows, while BlackRocks IBIT has recorded $12.96 billion in inflows. Combined, the ETFs have seen a net flow of $12 billion, and now hold 836.6k BTC worth approximately $53.1 billion.
While many crypto naysayers are now saying the top is in for this bull cycle, the fact that the halving is still more than 30 days away says otherwise, as typical cycles don’t reach their peak for six to nine months after a halving.
The flows into the ETFs have been impressive thus far, but they could just be the start as the majority of investment advisors have still not started recommending making allocations towards Bitcoin to their clients.
According to Grant Engelbart, vice president and investment strategist for Carson Group, one of the earliest advisor platforms to onboard the ETFs, only a “handful” of advisors have allocated to Bitcoin ETFs, and the average allocation was 3.5%.
Many analysts are now pointing to the halving as the next catalyst for Bitcoin and the broader crypto market and see prices trading sideways until that time.
“Bitcoin is now an important institutional asset unlike ever before,” said Henry Robinson, co-founder and Head of Crypto at Decimal Digital Currency, in a note shared with Kitco Crypto. “New Bitcoin ETFs are booking 9-10 figure weekly net inflows and hold over 400,000 BTC, over 800,000 including GBTC, and over 1,000,000 if we include MicroStrategy.”
“We're seeing this accumulation begin to affect price already, and the post-halving effect at current prices means about $800m less of monthly new BTC supply soon,” he said. “We expect further new all time highs in 2024.”
Addressing the heavy losses for derivatives traders, Robinson highlighted that “Leveraged traders tend to get wiped out when everyone believes profits are a sure thing, and sentiments have been very bullish. We are not surprised to see this correction ahead of the halving, liquidating the more extreme bullish bets before an upward continuation, and would definitely call something like this a ‘buy the dip’ opportunity.”
“The BTC market is getting smarter, and deeper pocketed. All this new liquidity from ETFs is making BTC pricing more rational and thwarts market manipulation,” he said. “More importantly, the Bitcoin ETFs have created a foot in the door to educate traditional asset managers about Bitcoin. They may have ignored it out of caution or due to regulatory constraints before, but now many are taking a closer look and will realize the incredible risk to reward ratio. Adoption is only getting started.”
“The market is clearly trying to mass accumulate Bitcoin, but price action takes time to follow local supply and demand,” Robinson concluded. “We may see exuberant bullish action, dramatic sell-offs, or both, before and after the halving as market participants roll into and out of their halving bets.”
And for those less experienced with cryptocurrency bull markets and the volatility that comes with them, market analyst Rekt Capital had the following words of advice for when to expect a resumption of the Bitcoin bull market.
Bitcoin will retrace deep enough to convince you that the Bull Market is over
And then it will resume its uptrend$BTC #BTC #Bitcoin— Rekt Capital (@rektcapital) March 19, 2024
