- Bitcoin price dropped below $69,000, significantly below its recent all-time high of $73,700, but has since recovered somewhat
- Drop attributed to higher-than-expected inflation data signalling the Fed may not cut interest rates in May, leading to sell-off, and Grayscale moving over $400 million in BTC to Coinbase for selling.
- Despite Grayscale redemptions, net inflows for other ETFs passed $1 billion mark, so overall crypto market remains strong.
Bitcoin took a hit today, falling well below its fresh all-time high to under $69,000 per coin. The biggest digital coin by market cap has since recovered but is still significantly below the $73,700 level it hit yesterday.
Reasons for the Drop
A few factors seem to be at play in bitcoin’s price drop.
Inflation Data
Data dropped on Thursday from the Labor Department’s Bureau of Labor Statistics showing that the producer price index jumped 0.6% last month. The important inflation indicator showed prices were higher than expected in February. Traders interpreted this as a sign that the Federal Reserve might not cut interest rates in May, leading to a sell-off of digital assets and stocks.
Grayscale Selling
Around $400 million in Bitcoin was shifted by Grayscale to its custodian Coinbase. In January, the fund manager was getting rid of a huge number of digital coins, at one point moving $22 billion in a matter of days to the exchange. This led to downward pressure on the price.
Grayscale started shifting its BTC to Coinbase for selling after it converted its fund into a BTC exchange-traded fund (ETF) on January 10. Before the conversion, investors had to hold their shares for at least six months. Now it’s an ETF, investors have been keen to redeem their holdings and take home profits.
Conclusion
Despite the Grayscale redemptions, net inflows for the nine other ETFs trading passed the $1 billion mark, a record, on Tuesday. So, while bitcoin saw a dip, the overall market remains strong.
