Bitcoin Plummets to $65,110: On-Chain Data Predicted Volatility
Bitcoin (BTC) experienced a rapid downward spiral, dropping to a low of $65,110 on Friday after briefly flirting with the $71,000 mark. The cryptocurrency market was taken by surprise by this price crash, but according to on-chain data, the downturn was not entirely unexpected.
Crypto research firm Kaiko had warned of increasing expectations for near-term volatility, with implied volatility for expiries in the following two weeks jumping from 59% to 71% in just two days. Additionally, two key indicators had been signaling warning signs of an impending correction since late March.
Traders’ unrealized profit margins and the realized price, as highlighted by on-chain analytics firm CryptoQuant, have been showing weakness for weeks. Despite these signals, market exuberance may have overshadowed these warnings.
As Bitcoin dipped below $66,000 for the first time since April 4, liquidations totaling $920 million were recorded in the past day. The retracement of S&P 500 and gold prices alongside cryptocurrencies also suggests that concerns about CPI and inflation are surfacing across sectors.
The most recent Glassnode report indicates that the market has entered a euphoric phase, with profit-taking on the rise. Compared to previous cycles, the current euphoria phase is still in its early stages, with previous cycles experiencing multiple price drops of more than -10%, some even deeper.
At its current price, Bitcoin is down 8.32% from its all-time high of $73,750 set in mid-March. As the market navigates through this correction, it is crucial for the crypto community to monitor these key metrics to gauge the market’s health and stability.
