Here Are The Drivers Behind The Bitcoin Price Crash To $68,000

Bitcoin has again experienced a price decline since briefly climbing above the $72,000 mark on April 8. This price dip is believed to be due to a couple of factors, which no doubt present a bearish outlook for the flagship crypto.

The March Consumer Price Index (CPI) data is scheduled to be released on April 10. Some market experts predict that the report will show a rise in overall inflation. This could lead to the Federal Reserve taking a hawkish stance on interest rates, negatively impacting Bitcoin’s price and the broader crypto market. 

This would explain why Bitcoin’s price has declined lately, as crypto investors remain on the sidelines ahead of the CPI report. However, if the inflation figures come in favorable, this could restore investors’ confidence in the economic situation and provide a much-needed bullish outlook for the crypto market. 

Also, considering that January and February’s inflation data exceeded expectations, it is necessary to highlight what last month’s data exceeding expectations could mean in the long term. So far, the Fed has continued to hold interest rates steady at about 5.3%, and there was even optimism at the beginning of the year that there could be rate cuts at some point this year. 

However, with inflation continuing to stay well above the Central Bank’s target of 2%, there is a growing feeling that they might be forced to take drastic measures at some point. That is ultimately not good for Bitcoin’s price, especially since different crypto analysts gave bullish predictions partly based on their assumption that there would be several rate cuts this year. 

The Spot Bitcoin ETFs have also contributed to Bitcoin’s recent decline. These investment funds experienced a net outflow on April 8 and 9, leading to a significant Bitcoin dump on the market. Specifically, these outflows came from the Grayscale Bitcoin Trust (GBTC), which recorded an outflow of $303.3 million and $154.9 million on April 8 and 9, respectively. 

Meanwhile, the other Spot Bitcoin ETFs have not recorded impressive inflows during this period, which shows their demand has slowed. For context, 6 out of the 10 Spot Bitcoin ETFs (excluding GBTC) recorded zero inflows on April 9, while 5 out of 10 recorded zero inflows on April 8. BlackRock’s iShares Bitcoin Trust (IBIT) also recorded a relatively low inflow of $21.3 million that day. 

At the time of writing, Bitcoin is trading at around $69,300, down over 2% in the last 24 hours, according to data from CoinMarketCap.