Bitcoin’s bull run screeches to a halt; drops 7 per cent in a day to trade at $67,830

Bitcoin has unceremoniously declined by 7.5 percent in one day to trade around $67,830, CoinDesk data shows. The price of bitcoin even dropped to as low as $67,000 before recovering in the later part of the day.

Some cryptocurrency experts believe that this was expected on account of profit booking that usually follows a bull run, while there is another view that argues that the crypto price drop may be linked to the release of Producer Price Index (PPI) by US Federal Reserve. 

“The recent strong CPI data has cooled the expectation of a Fed rate cut, and gold prices have also tumbled. The recent surge in bitcoin prices has been too fast for the market to price correctly, so a current correction is expected,” Greta Yuan, Head of Research at VDX, said in a note.

Shivam Thakral, CEO of BuyUcoin, an Indian crypto exchange, said “Bitcoin has experienced a flash dump as low as $67,000 as the cryptocurrency saw over a 7% decrease in the last 24 hours. Ethereum also saw similar price action by trading down around $3600. This price action could be linked to the announcement of the Producer Price Index (PPI) by the Fed, which was higher by 0.6% last month. The Fed is signalling that no interest rate cut could be expected at the May meeting.”

Another expert Adrian Wang, Founder and CEO of Metalpha, commented that the crypto market could be recalibrating to uncertainties in run up to the next month’s mining reward halving.

Parth Chaturvedi, Investments Lead, CoinSwitch Ventures calls this a healthy correction in the rally.

"Bitcoin prices have surged over 40% in the last month alone and the current drop in prices is a healthy correction. But the reason for the fall can be attributed to macro factors, as crypto as an asset doesn't exist in isolation. The US inflation numbers have surprised everyone on the upside, which has reduced any expectations of a Fed interest rate cut in their next few meetings. This has resulted in a sell-off across "risk-on" assets including US stocks, Asian stocks and Crypto as well," he says.

Bull run halts

It is worth recalling that Bitcoin on March 12 spiked to $72,000 to become the eighth largest asset in the world by market capitalisation, surpassing silver.

The oldest cryptocurrency even hit the highest-ever level of $73,000 on Wednesday following the release of CPI data. 

Notably, massive jump in the bitcoin prices was the upshot of US markets regulator Securities and Exchange Commission (Sebi’s counterpart in America) giving a green signal to the spot bitcoin ETFs.

This move was expected to widen the cryptocurrency’s reach and popularity among investors.

ALSO READ: After Bitcoin’s surge, Ethereum geared to hit the top league with dencun update. Should you invest?

For the uninitiated, spot bitcoin ETF refers to an investment instrument which can invest directly in bitcoin rather than in its futures contracts.

This was meant to enable investors to get direct exposure to bitcoins rather than through derivative contracts.