Bitcoin fell nearly 5%, reaching $65,000 for the first time in a week, as the overall cryptocurrency market cap fell 7%.
Ethereum price also experienced a liquidation, with the largest altcoin falling 8.5% in 24 hours. According to Coinglass, more than 277,000 traders liquidated $877.79 million worth of assets in 24 hours.
BTC declines are likely driven by pre-halving pullbacks and miner capitulation. There is a familiar expectation that the halving will lead to a larger bull cycle for Bitcoin. The pullback usually occurs when traders start taking profits just before the halving, anticipating a short-term high before the event.
Prior to the last halving of 2020, a notable decline occurred about a week before the event, similar to recent price movements.
In anticipation of the halving event and as difficulty and operating costs increased, many miners stopped mining BTC. In particular, Bitcoin mining difficulty reached an all-time high this week.
The Bitcoin network has a built-in difficulty adjustment feature to maintain consistent block times, compensating for changes in total hashing power. When a miner surrenders, the total hashing power decreases, ultimately allowing the network to lower the difficulty, making mining more accessible and potentially more profitable for the remaining miners.
But the recent liquidations may also be driven by investor skepticism. Earlier this week, Maraton Digital predicted that this year’s halving will not have an explosive effect on the price of BTC, as the token has already peaked early due to significant inflows into Bitcoin ETFs.