Some argue that a diminishing narrative surrounding exchange-traded funds (ETFs) and concerning economic indicators from the United States could have triggered the sudden downturn in the cryptocurrency market.

On March 15, Bitcoin (BTC) experienced a significant drop, plummeting by 7.5% within a short span, from $72,000 to $66,500. This led to liquidations totaling over $661 million, affecting nearly 200,000 traders. Although the asset briefly rebounded to reach $68,000, it faced rejection at that level, subsequently declining further to around $67,500, marking an 8.3% decrease from its recent all-time high of $73,737 on March 14.

The majority of liquidations, approximately 80%, were associated with long positions, amounting to $525.2 million, while short position liquidations totaled $136.5 million. Concurrently, the overall cryptocurrency market capitalization witnessed a 7.3% decline, reaching $2.68 trillion, with approximately $175 billion exiting the market.


BTC/USD 1 hour. Source: Tradingview

Greeks Live, a provider of crypto derivatives tools, highlighted a shift in market sentiment on March 14, suggesting a potential change in the narrative concerning ETF inflows. Pav Hundal, the lead analyst at Australian crypto exchange Swyftx, expressed concerns over a possible correction if ETF volumes continue to decrease, foreseeing a retracement to the low $60,000 or high $50,000 range.

Moreover, there was a notable decrease in Bitcoin ETF inflows, down by 48% from their 14-day average on March 14, according to data from Farside Investors. This decline prompted speculation among traders, with some predicting further downward movement in BTC price, possibly reaching levels around $63,000 to $64,000.

The release of economic data in the United States this week further fueled market uncertainties. Reports of higher-than-expected Producer Price Index (PPI) data suggested the likelihood of prolonged high rates from the Federal Reserve. Additionally, hotter-than-anticipated Consumer Price Index (CPI) data exacerbated concerns about the economic outlook. As a result, Asian stock markets retreated on Friday amid dashed hopes for imminent interest rate cuts in the U.S.