Bitcoin
Bitcoin (BTC) Price Pullback to $66K Triggers $250M Crypto Settlement Trades for FOMC, CPI Report
Cryptocurrencies fell further into correction on Tuesday with bitcoin (BTC) falling near $66,000 as investors prepare for Wednesday’s key US inflation report and Federal Reserve meeting.
Bitcoin (BTC) It began the day trading near $70,000 before hitting a three-week low of $66,170 during the US session. It has recovered slightly to near $66,500 but is still down almost 5% in the last 24 hours.
Altcoins suffered even deeper pullbacks during the same period, with the crypto market benchmark CoinDesk 20 falling more than 6%, with all twenty constituents in the red. Ethereum Ether (ETH) broke below $3,500 and fell 6.5%, while Solana (SUN)dogecoin (DOGE)Cardano ADA and Chainlink LINK suffered losses of 6% to 9%.
The sudden pullback generated more than $250 million in liquidations of leveraged derivatives trading positions across all crypto assets, CoinGlass Data shows, marking the second significant leverage increase in a week following Friday’s $400 million settlement.
Liquidations occur when an exchange closes a leveraged position due to a partial or complete loss of the trader’s initial money, or “margin,” because the user does not meet margin requirements or does not have sufficient funds to keep the position open.
One reason behind the pullback is that investors “de-risk” crypto assets ahead of the May Consumer Price Index (CPI) report and the Fed meeting, hedge fund QCP said in an update.
Bitcoin could have a volatile session on Wednesday as it has been “highly responsive” to economic data recently and its 30-day correlation with US stocks rising to the highest level since 2022, K33 Research noted in a market update on Tuesday.
“The stage is set for a frantic macro Wednesday, with May’s CPI data and the FED’s interest rate decision poised to move the market,” said K33 analysts.
Investors will monitor the interest rate outlook of members of the Federal Open Market Committee (FOMC) – the so-called “dot plot” – to see how many rate cuts policymakers are projecting for this year in light of recent readings. inflation and weaker economic data.
“The FOMC dot plot, along with forward guidance during Jerome Powell’s press conference, will likely be the most relevant price drivers as BTC resumes its attention to market interest rate expectations.”
Market watchers noticed some positive signs during the sell-off that could point to a quick recovery.
Bitcoin has suffered several pullbacks this year ahead of FOMC meetings, only to reverse the move shortly after, pseudonymous crypto analyst Gumshoe pointed out in a blog post. X post.
Bitcoin futures open interest on cryptocurrency exchanges BitMEX and Binance deviated earlier today, cryptocurrency analytics platform CryptoQuant reported, citing pseudonymous trader BQYoutube. “This type of phenomenon is often observed when whales [on] BitMEX Starts Accumulating Positions While Binance Retail Is Destroyed,” the publish added.
“Despite short-term headwinds, we believe this could be a good opportunity to accumulate coins,” said QCP.