Key Points
- Bitcoin long liquidations have surged above $145 million due to a downturn in demand from U.S. investors.
- The wider cryptocurrency market experienced over $463 million liquidations in the same 24-hour period.
Bitcoin Liquidations Surge
As the price of Bitcoin (BTC) plummeted to a multi-month low, long liquidations spiked over $145 million in the past 24 hours. A drop in demand from U.S.-based investors is primarily responsible for the recent price correction.
In the last day, there were $166 million in liquidated bitcoin positions. The broader cryptocurrency market saw over $463 million in liquidations. The lion's share of these liquidations, around $398 million, were long positions, as per Coinglass data.
Bitcoin is currently teetering above the $57,000 mark, after falling nearly 8% in the past 24 hours. Meanwhile, the price of Ethereum (ETH) has dropped by 6.2% to $2,870 in the same period.
Drop in Demand Leads to Price Correction
The recent Bitcoin price correction is tied to a deceleration in demand growth for the asset, as per this week's CryptoQuant market report. The report noted slower growth in the Bitcoin balance of permanent holders and large 'whale' investors in the spot market.
Bitcoin whale demand growth peaked at a monthly growth rate of 12% in late March and has now slowed down to 6%. The report pointed out that price rallies are typically driven by faster growth in Bitcoin demand from large investors.
The report also observed a declining Coinbase premium since early March, dipping below zero in recent weeks. A negative Coinbase premium implies that the price of Bitcoin is lower in the U.S. than in other countries, indicating a reduced appetite from U.S. investors to purchase Bitcoin.
The decline in U.S.-based demand is further evidenced by indicators showing that the U.S. spot Bitcoin exchange-traded fund (ETF) market is poised to experience its first month of net outflows since several funds were launched on January 11.
New Bitcoin Price Target
CryptoQuant analysts have set a new short-term price target for Bitcoin of between $55,000 and $57,000, noting that the current Bitcoin price is already below traders’ cost basis. They stated that from a short-term valuation perspective, prices may target $55,000-$57,000. This level is 10% below the current cost basis of traders, at $63,000, which has been the ultimate support for prices during bull markets.
The report also highlighted an increase in Bitcoin supply, as Bitcoin miners have intensified their selling activity over the last month. In particular, the 30-day average of daily miner selling has surged to its highest level since early January.
Bitcoin dominance edged down slightly over the past day to 50.3%, with Ethereum dominance seeing a slight uptick to 15.7%, according to Coingecko data. The global cryptocurrency market cap decreased by 6.5% in the past 24 hours and now stands at $2.25 trillion.
The GM 30 Index, representing a selection of the top 30 cryptocurrencies, fell 6.8% to 118.77 in the same period.
