Bitcoin Nosedives Over 5% in Post-Easter Sell-Off

Following a failed attempt to reclaim $68,000 support on April 1, Bitcoin (BTC) has plunged 5.38% to $66,700, extending its decline since the start of Q2 to 6.3%. Institutional outflows from Bitcoin ETFs, particularly Grayscale's GBTC, have contributed to the price decline. Market makers like QCP Capital have warned of downward pressure from increased selling of call options and buying of put options in the crypto options market. The sell-off has also been driven by substantial liquidations on exchanges like Binance, as indicated by perpetual contracts funding rates falling from 77% to zero.

Bitcoin Price Plunges Over 5% Following Easter Weekend Sell-Off

After a brief attempt to reclaim the $68,000 support level on April 1, Bitcoin (BTC) encountered a dramatic reversal, tumbling below $68,000 and experiencing a sharp 5.38% decline. At the time of this report, BTC is trading at $66,700, marking a 6.3% decrease since the commencement of Q2.

This significant price drop coincides with continued institutional outflows from spot Bitcoin exchange-traded funds (ETFs) in the aftermath of the extended Easter weekend. Grayscale Bitcoin Trust (GBTC) witnessed outflows amounting to $302.6 million on April 1, eclipsing the combined inflows of $209.9 million from BlackRock's IBIT and Fidelity's FBTC. Consequently, the net outflow stands at $85.7 million.

QCP Capital, a reputable trading firm and market maker based in Singapore, has cautioned regarding intensifying downward pressure across cryptocurrency spot markets in its recent "Asia Morning Color" Telegram update. The firm attributes this trend to early indications provided by the crypto options market, where elevated activity in selling calls and purchasing puts for both BTC and ETH has exacerbated spot price declines.

QCP Capital further emphasizes that the precipitous sell-off in BTC and other cryptocurrencies stems from substantial liquidations on exchanges such as Binance. Perpetual contracts funding rates have plummeted from a peak of 77% to flat, reflecting a reversal of market sentiment.

Analysis of exchange order book liquidity on Binance by Material Indicators paints a concerning picture for BTC's price trajectory in the lead-up to the upcoming Bitcoin halving. The firm notes an increase in bid liquidity around $60,000, implying that "smart money" has positioned bids as low as $62,000.

These developments underscore the precarious state of the Bitcoin market, which has been grappling with a confluence of factors, including institutional outflows, market volatility, and the looming halving event. Investors should exercise caution and monitor the situation closely as the price of Bitcoin navigates this period of uncertainty.