Wild bitcoin price swings trigger $150 million in liquidations in the BTC futures market – here are the key themes driving the market right now

Bitcoin. Source: Adobe

Bitcoin (BTC) price saw a sharp swing on Wednesday.

At a time when the world’s largest cryptocurrency by market cap was hitting session highs at just over $30,000 earlier in the day, BTC is up over 6% on the day.

With session lows later in the day at $27,200, BTC price was down as much as 3.8%.

Bitcoin’s high-to-low swing of over 9% is the largest such (percentage) intraday trading range since the cryptocurrency rocketed nearly 10% in one day on March 17.

In the end, Bitcoin ended the session largely unchanged in the mid-$28,500s, where it continues to trade as Asia-Pacific trading gets underway.

But market participants were not spared.

According to crypto derivatives analytics site coinglass.com, more than $150 million worth of leveraged bitcoin futures positions were liquidated (i.e. stopped out, or “rekt”) on Wednesday.

The split between liquidated long and short positions was relatively even.

Wednesday marked the biggest day of liquidations in the bitcoin futures market in at least three months.

Short-term bitcoin bulls are encouraged by the fact that the cryptocurrency has once again found strong support at the low-$27,000s in the form of recent lows and its 50-day moving average.

A short-term buy signal monitored by Bloomberg was triggered a week ago when Bitcoin changed hands just below $29,000.

Historically, BTC gains about 7% within the next 10 days after this trading signal.

If history is a good guide, then bitcoin price could be set for a rapid rally towards $31,000 in the next three days.

Here are the key issues driving Bitcoin right now

Bitcoin’s chances of a sustained recovery back above $30,000 in the coming days and weeks are looking increasing.

That’s because fears of a banking crisis that propelled Bitcoin higher in March are back in focus after vulnerable US bank First Republic’s profits last quarter revealed $100 billion in customer withdrawals, which sparked renewed concerns about the bank’s solvency and the health of the broader regional pool for US banks.

As worries about the health of the US banking sector mount, so do worries about the contraction in bank lending that typically leads to recessions.

Recession fears therefore weighed on the US dollar and US yields on Wednesday and could do so for the foreseeable future as traders have increased bets on a Federal Reserve rate cut cycle later this year.

The combination of worries about a banking crisis fueling demand for “safe havens” for alternative forms of money like bitcoin and gold, and bets on easier financial conditions ahead are a key macro tailwind for bitcoin right now.

Upcoming data releases on US Q1 GDP, March PCE core inflation and Q1 Labor Cost Index will provide important insights into the current state of US growth, inflation and wage inflation – all extremely important considerations for the Fed.

If they remain resilient enough, it should keep the Fed on course to hike rates again (to 5.0-5.25%) at next week’s meeting.

But these rate hikes are widely expected and baked in, with markets much more focused on the coming rate cut cycle (when it will start, how aggressive it will be, etc.).