The cryptocurrency market is down today, with the total market capitalization falling by 7.68% to $2.27 trillion on March 19.
Bitcoin BTC tickers down $66,703, the leading crypto by market capitalization, is leading the losses by dropping approximately 7% to around $62,650 on the day. Ethereumʼs native token, Ether ETH tickers down $3,384, the second-largest crypto by market cap, was down by around 8% to $3,200 in the same period.
Other top tokens performed similarly bad.
Spot Bitcoin ETFs post biggest daily outflow
Todayʼs decline in the cryptocurrency market capitalization coincides with the largest single-day outflow ever recorded from Bitcoin exchange-traded funds (ETFs).
Grayscale Bitcoin ETF experienced outflows worth $642.5 million on March 18 — its biggest. Meanwhile, Fidelity’s Bitcoin ETF saw its lowest inflow day on record at $5.9 million, as per Farside Investors data. That resulted in a net outflow of $154.3 million from spot Bitcoin ETFs.
Bitcoin ETF flow table. Source: Farside Investors
The slowdown in capital inflows toward Bitcoin ETFs occurs ahead of the Federal Open Market Committee meeting on March 20.
As Cointelegraph covered, Bitcoinʼs and, in turn, the crypto market’s 2024 bull run potential hinges on the Fed shifting from tight to loose monetary policy, likely if inflation dips below 3% or economic downturn signs emerge. Hence, the crypto market rally may falter if high-interest rates persist.
Overbought correction
Todayʼs crypto marketʼs decline is part of a broader correction move that began on March 14 when it established a local peak at around $2.72 trillion.
Related: Bitcoin levels to watch next as BTC price risks sub-$60K retest
First, bearish divergence signals emerged ahead of the correction, observed through the market’s increasing capitalization contrasted with a decreasing daily Relative Strength Index (RSI). A bearish divergence suggests that the price growth is losing its underlying strength.
Second, the marketʼs daily RSI reached excessively high levels before the correction, indicating overvaluation and leading to reduced trader demand due to perceived excessive prices.
Meanwhile, the Net Unrealized Profit and Loss’s (NUPL) sharp rise alongside Bitcoin’s rapid price increase signals a prime opportunity for profit-taking.
Historical data shows that NUPL values above 0.6 seldom sustain before leading to significant price adjustments. Thus, a noticeable correction is visible in March, with a broader downside move possibly having already begun. The levels to watch for are covered here.
Long liquidations boost crypto market sell-off
The sharp drop in major cryptocurrencies’ prices has sparked a flurry of liquidations in the derivatives market, catching bullish traders by surprise and leading to a swift round of long position liquidations.
In the past day, the cryptocurrency market has seen over $182 million in positions liquidated, with long positions accounting for $140 million of the total.
Such liquidations of long derivative positions can lead to downward pressure on asset prices, especially when thereʼs a lack of adequate buying momentum from trading volumes.