Bitcoin's value dropped to below $67,000 on Tuesday, erasing gains made over the previous week. Ethereum and other top cryptocurrencies also declined, causing a $122 billion loss in the overall market capitalization. The decline coincides with a surge in the U.S. dollar index and heightened volatility ahead of Bitcoin's halving in April. Despite historical price increases following halvings, uncertainty persists regarding whether the event is priced in. Analysts also note the impact of Bitcoin ETFs in the lead-up to the halving and predict a potential surge in Q2 due to increased institutional interest.
Bitcoin's Price Plummets, Erasing Recent Gains Ahead of Halving
The cryptocurrency market has witnessed a sharp decline, led by a steep drop in Bitcoin's value. Bitcoin's value has fallen by 4.6% over the past 24 hours and 6% over the past week, trading at $66,139 at the time of writing. The broader crypto market has followed suit, with the total market capitalization of all cryptocurrencies dropping by 5.2% to $2.6 trillion, wiping out approximately $122 billion from the market.
Among the top 30 cryptocurrencies by market capitalization, barring stablecoins, all have experienced immediate declines. Ethereum, the second-largest cryptocurrency, has shed more than 6% of its value, trading at $3,331. Aptos and Bitcoin Earnings have incurred the most significant losses among the top 30 tokens, plummeting by 13.5% and 9.9%, respectively.
Throughout the crypto market, over $426 million has been liquidated in the past 24 hours, with $342 million stemming from long liquidations, according to data from CoinGlass. Bitcoin alone has witnessed approximately $90 million in long liquidations.
The price dip coincides with the U.S. dollar index (DXY) exceeding 105 for the first time this year, indicating a strengthening dollar. The index tracks the dollar's value against six major global currencies, including the Euro, Swiss franc, Japanese yen, Canadian dollar, British pound, and Swedish krona.
Tuesday's price decline also occurs amidst heightened volatility in the crypto market ahead of April's Bitcoin halving, an event where the block reward allocated to miners is reduced by half. While previous halvings have been followed by surges in Bitcoin's price, the debate continues over whether the halving has already been priced in. Some analysts suggest that there is a "crisis of faith" among traders in the lead-up to the halving.
Moreover, this year's halving is unique, with Bitcoin's price reaching an all-time high prior to the event, driven by the introduction of several U.S.-based Bitcoin ETFs in January. The resulting supply crunch caused by these ETFs purchasing Bitcoin, coupled with the halving, has been cited by analysts as a bullish indicator.
Meanwhile, a recent report from crypto exchange Coinbase suggests that Q2 could be favorable for the crypto market, fueled by increased institutional interest in the crypto space following the approval of Bitcoin ETFs.
