Bitcoin fluctuates around $48,000 as increased price volatility causes liquidation spike

Quick Take

Bitcoin price volatility has caused a spike in liquidations as the digital asset’s value has posted gains of over 11% in the past week.
The circulating supply in profit has increased to over 90% in the past 24 hours, according to data from The Block.

The price of bitcoin has increased by over 11% in the past seven days — but recent price volatility has caused a spike in liquidations.

According to Bitfinex Head of Derivatives Jag Kooner, bitcoin's value appreciation over the past week has been driven by spot market traders. "The majority of buying has come from spot takers, meaning market orders by aggressive buyers in the spot markets," Kooner told The Block.

Last Monday, the price of bitcoin hovered just above the $42,000 mark; however, since then, most liquidated leveraged positions have been short, according to Kooner. "As the price has increased over the past seven days, it caused a large amount of short liquidations, and this has further propelled the price upwards," he added.

The fluctuating price action in the past 24 hours has caused a spike in cryptocurrency market liquidations to the sum of over $111 million, according to Coinglass data. In the past 24 hours, 42,122 traders were liquidated, with over $30 million bitcoin leveraged positions being wiped out.

The price of bitcoin has decreased by almost 1% in the past 24 hours. Image: The Block.

The largest digital asset by market capitalization was changing hands for $47,894 at 8:41 a.m. ET, according to The Block's Price Page.

Increase in BTC supply in profit

The upward trajectory of the bitcoin price has caused an increase in the percentage of digital asset's circulating supply that is in profit. This is an increase of around 14% from a low of 79% at the beginning of February.

However, one market indicator signals bitcoin investors are holding on to their assets, possibly in anticipation of future price appreciation due to a combination of factors — such as the upcoming block-reward halving.

According to CryptoQuant data, bitcoin exchange reserves have fallen by over 0.5% in the past week.

Bitcoin exchange reserves have fallen in the past week. Image: CryptoQuant.

The CryptoQuant data showed that over 11,000 bitcoin had been moved from exchanges to cold storage since last Monday, with bitcoin exchange reserves hitting a year-to-date low on Saturday. The outflow reduces liquid supply and suggests long-term holders are betting on bullish price movement in the future.

Investors could be anticipating multiple price catalysts impacting bitcoin supply and demand dynamics. Such factors include the likelihood of the bitcoin halving occurring in April and the possibility of a U.S. Federal Reserve rate cut in May.

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