Bitcoin (BTC) and Ether (ETH) prices fell 15% and 20%, respectively, on April 23 when the cryptocurrency market underwent a major correction.
Five factors were likely to lead to a sharp drop in the price of bitcoin and ether in one day, including the mass liquidation, a frenzied futures market, lower kimchi premiums, the sale of whales, and concerns about US President Joe Biden’s tax plans.
A crowded futures market is awaiting a $ 4 billion settlement
On April 23, within 24 hours, positions ended up with more than $ 4 billion in the cryptocurrency market.
According to data analysis platform Bybt, the bitcoin market is currently largely short, with short positions accounting for around 54%.
Open Interest Futures on BTC. Source: Bybt
This indicates that the multi-billion dollar long trades ended the previous day, leaving many short positions.
The data also shows that open interest in the ether futures market has reached an all-time high on the Chicago Mercantile Exchange, indicating a congestion in the Ethereum futures market. Open interest in bitcoin futures also increased before the bitcoin price plummeted.
Now both ETH and BTC are in a better position to recover as their open interests have taken hold.
In particular, open interest in Bitcoin futures on Binance, which has consistently recorded the highest trading volume in derivatives on BTC, has fallen to levels not seen since March 8th.
Kimchi Premium – 0%
With the price of bitcoin and ether falling sharply, the premium for kimchi in South Korea has fallen to 0%.
South Korea Price Index. Source: CryptoQuant
The premium is currently in excess of 4%, but the South Korean cryptocurrency exchange market saw a sharp decline after a negative statement from national financial observers.
On April 22, South Korean Financial Commissioner Eun Seung-soo announced that the government imposes taxes on cryptocurrencies, but they are not financial assets and the government will not protect them.
The sudden announcement from the South Korean financial controller is likely to trigger a massive sell-off in the South Korean cryptocurrency market, resulting in the collapse of the kimchi premium.
Small and medium sized whales for sale
On April 20, the Materials Indicators Team, which monitors the flow of bitcoin on major exchanges, stated that small and medium-sized whales are up for sale.
“While people over a million dollars continue to buy on the fluctuations no matter the reason, the $ 100 to $ 1 million is putting men high and low in order streams.
Whales sell their resources. Source: Physical Indicators.
This trend was especially important because the big whales amassed bitcoins during the same period.
Sales pressure from small and medium-sized whales that sold bitcoins worth between $ 100,000 and $ 1 million on major exchanges exacerbated the Bitcoin decline in the short term.
Biden’s tax woes
The decline in Bitcoin prices also coincided with the release of plans by US President Biden to raise taxes on the wealthy.
The US stock market is lower, with the Dow Jones Industrial Average down more than 1% in the trading session on April 22nd.
Holger Zschibbitz, a market analyst at Welt at the time said:
The Dow Jones dropped 400 points on concerns about a capital increase. BBG reports that Biden plans to increase the capital gains tax to 43.4% for wealthy Americans. The proposal would increase the capital gain rate to 39.6% for those earning> $ 1 million, 20% more from now. “