(Kitco News) – April Fools turned out to be no laughing matter for the crypto market as it ushered in the latest Bitcoin (BTC) pullback, with the top crypto plunging 7.45% overnight in what many have called a leverage flush-out that hit longs especially hard.
Data provided by TradingView shows that after briefly recovering from a pullback to $68,000 on Monday, Bitcoin’s price plunged during the Asian trading session to hit a low of $64,530 near 9 am EST, its lowest price since March 24.
BTC/USD Chart by TradingView
The pace of the selloff caught many traders off guard as Bitcoin tumbled 5% from $69,450 to $65,970 in less than 30 minutes in early hours on Tuesday, and then sank lower over the next couple of hours.
Data provided by CoinGlass shows that longs were liquidated to the tune of $406.5 million over the past 24 hours, while shorts lost $101.76 million, for a total flush out of $508.25 million.
The rapid decline of Bitcoin also led to widespread losses in the altcoin market as traders sold their holdings en masse. Many now await a stabilization in BTC price before reentering the market.
Daily cryptocurrency market performance. Source: Coin360
And it’s not just cryptos that are struggling on Tuesday. Stocks have also fallen under pressure, with the S&P 500, Dow, and Nasdaq down 1.04%, 1.08%, and 1.43%, respectively, at the time of writing.
The one bright spot was gold, which surged to a new all-time high of $2,277 while other markets were trending in the opposite direction.
The pullback for cryptos and stocks coincided with a surge in the dollar index (DXY), which hit 105.1 during Asian trading hours on Tuesday on the back of upbeat U.S. factory data – its highest level since mid-November.
The DXY descended to 104.72 since that time, which coincided with a bounce back in Bitcoin’s price from its daily low to trade at $66,075 at the time of writing.
“Bitcoin lost five percent of its value in a matter of minutes in the early hours of Tuesday morning, with the mini flash crash likely driven by trading in Asia,” said Neil Roarty, analyst at investment platform Stocklytics. “Pinpointing the precise reason is tricky, but a strong dollar - buoyed by positive manufacturing data coming out of the US - may well have been a factor.
“The dip won’t overly concern investors after months of gains, but it does serve as a reminder that the bullish sentiment around Bitcoin, which has seen the cryptocurrency more than double in price since the autumn, will not continue indefinitely,” he said. “We’re less than three weeks out from Bitcoin’s next ‘halving’ - the quadrennial event where mining rewards are cut by 50 percent - and with market volatility already on the rise, expect more uncertainty to come.”
According to market analyst CrediBULL Crypto, “All we have done here with this push down is test the two logical levels of support. Nothing to be freaking out about.”
Market analyst Rekt Capital called the price action over the past two days a “failed post-breakout retest.”
“Bitcoin could still technically recover above the old all-time high of ~$69000 before the new Weekly Candle Close is in,” Rekt Capital said. “In the meantime, however, $BTC first would need to hold this ~$65600 Weekly Range Low to protect the range.”
“Generally, momentum is going to be slowing as BTC approaches the Halving,” he concluded.
