Why did Bitcoin (BTC) Price Drop 7% After Hitting ATH?

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Bitcoin (BTC) bulls have triumphed over the past few weeks, thus raising optimism of a super cycle ahead. Cash inflow into the Bitcoin investment products has remained high despite the high volatility since the calendar flipped in January. According to weekly data analysis provided by CoinShares, Bitcoin netted $1.72 billion in cash inflow last week, representing 94 percent of all the cash inflows to the crypto investment products last week.

Nevertheless, crypto cash rotation has favored altcoins with great fundamentals like Optimism (OP), which has joined the digital asset club in the price discovery phase.

Heavy Liquidation Preceding More Short-Term Pain

According to market data provided by Coinglass, more than $675 million was liquidated from the crypto derivatives space in the last 24 hours leading to Tuesday during the early New York session. Heavy crypto liquidations have come after Bitcoin price rallied towards the all-time high (ATH) in the past few days, thus making it the first time before the halving event. 

The emergence of the meme coin mania – led by Dogecoin (DOGE), Shiba Inu (SHIB), Pepe (PEPE), FLOKI, and dogwifhat (WIF) – has signaled the end of the short-term bullish outlook.

As a result, Bitcoin price could lead the altcoin market to a short-term correction in the coming weeks before the halving impact kickstarts.

Technical Analysis Signals Bearish Pressure 

Although the Bitcoin short-term sentiments are split between the long and short traders, several technical indicators point to a possible reversal in the coming days. According to the TD Sequential indicator combined with the bearish divergence in the 1-hour Relative Strength Index (RSI), the next few days for Bitcoin will be mostly choppy.