Why is Bitcoin price volatile today?

Bitcoin (BTC) price is showing shocking volatility today by correcting by 7% after rallying to a new all-time high of $69,324 at Coinbase exchange. While Bitcoin’s price has benefitted from the vast inflows to the spot BTC ETFs and increasing investor interest in cryptocurrencies, it remains volatile and today’s sell-off is thought to be driven by a mix of profit-taking and liquidations in the futures market. 

Bitcoin price. Source: TradingView

Let’s look into the reasons why Bitcoin price is volatile today.

ETFs open the door for major institutional investor inflows

Bitcoin’s new all-time can largely be attributed to institutional investors investing in approved spot BTC ETFs.

According to CoinShares data, institutional investors pushed $7.6 billion into crypto year to date in 2024. In the past week, over $1.8 billion flowed into crypto investment products by institutional investors.

Crypto asset institutional investor inflow. Source: CoinShares

Of the $7.6 billion pushed to crypto assets in 2024, over $7.3 billion has flowed to Bitcoin specifically. The total assets under management (AUM) for Bitcoin dwarfs other digital assets, with $62.71 billion currently deployed.

Crypto asset institutional investor asset flow. Source: CoinShares

Related: The DeFi bots pumping Solana’s stablecoin volume

Spot BTC ETF momentum boosts market sentiment

As Bitcoin’s price reached an all-time high, investor sentiment turned to “extreme greed,” as measured by the Crypto Fear and Greed index. The level of greed on March 5 hit 90, making it the highest seen since February 2021.

JUST IN: Crypto Fear & Greed Index hits a value of 90 for the first time since February 2021. pic.twitter.com/lvuy4BJjLs

— CoinGecko (@coingecko) March 5, 2024

Despite the extreme level of greed, Bitcoin price remains volatile, with open interest increasing.

A sharp movement in the Bitcoin futures market can be noted by looking at liquidations. The timing of the long liquidations coincided with the elevated volatility, which sharply drove Bitcoin price down.

In a 24-hour period on March 5, over $111 million of Bitcoin long positions were…

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