Key Points
- Bitcoin (BTC) is trading at $68,319 on March 15, with a 4.5% drop over the past 24 hours due to “overheated” market conditions.
- The global crypto market cap has also fallen 4.1%, with Ether (ETH), BNB, XRP, Cardano (ADA) and Dogecoin (DOGE) all experiencing losses.
Bitcoin (BTC) is currently trading at $68,319, marking a 4.5% decrease over the last 24 hours.
This drop is due to an “overheated” state in the crypto market, according to data from the on-chain analytics firm, IntoTheBlock.
Market Downtrend
The BTC price had reached a new all-time high of $73,835 on March 14, but fell 9% to a new weekly low of $65,565 on March 15.
This decline in Bitcoin’s value has sparked a sell-off across the market, resulting in a 4.1% decrease in the global crypto market cap to $2.59 trillion.
The second-largest cryptocurrency by market capitalization, Ethereum (ETH), has also seen a 5% drop in the last 24 hours, falling to $3,708.
Other top-cap tokens such as BNB, XRP, Cardano (ADA), and Dogecoin (DOGE) have also suffered losses, decreasing by 2.3%, 7.3%, 5.8%, and 8% respectively.
Correction Signs
There had been warnings of a potential correction in the BTC price due to the market’s “overheated” state.
This information is supported by data from market intelligence firm IntoTheBlock, which points out the growing leverage in the crypto market as a sign of an impending correction.
The firm’s On-chain Insights newsletter reveals that the “amount that buyers of Bitcoin perpetual swaps pay those going short is at its highest since October 2021.”
These high funding rates indicate a market heavily skewed towards the long side.
Data from Coinglass shows that Bitcoin futures open interest (OI) on all exchanges reached its all-time high of $35.55 billion on March 15.
While a high OI reflects new buying in the market, it can also serve as a warning sign if it grows too high.
Rising Risk in DeFi Ecosystem
The high leverage conditions are also seen in the DeFi networks, with loans on these platforms increasing significantly.
The total debt on all DeFi protocols has doubled in 2024, and the amount of wrapped Bitcoin (WBTC) supplied to Aave has increased by more than 10,000 BTC (~$700M) so far in 2024.
This increase in debt and the rising rates in DeFi indicate a growing “demand for leverage.”
As a result, the DeFi ecosystem is accumulating a lot of risk, which could potentially lead to a price correction in the near future.
Despite the market’s “overheated” state, most traders have realized profits from their crypto investments.
Data from IntoTheBlock shows that 86% of all Bitcoin holders are in profit at current prices, increasing the chances of a continued sell-off in the short term as profit-booking continues.