Market Analysis

The price of Bitcoin (BTC) and Ether (ETH) fell by 15% and 20%, respectively, on April 23 as the cryptocurrency market became engulfed in a major correction. 

Five factors likely caused the price of Bitcoin and Ethereum to steeply drop in a single day include mass liquidation, an overheated futures market, the decline of Kimchi premium, whales selling, and Biden tax concerns.

Overcrowded futures market sees $4B worth of liquidations

On April 23, in a 24-hour span, the cryptocurrency market saw over $4 billion worth of positions liquidated.

According to, a data analytics platform, the Bitcoin market is currently majority short, with short positions accounting for around 54%.

This suggests that in the past day, billions worth of long position were liquidated, leaving a lot of short positions open.

Data also shows that the open interest of the Ether futures market reached an all-time high on CME, indicating that the ETH futures market was also getting overcrowded. The open interest of Bitcoin futures similarly spiked before the price of BTC dropped.

Now, both ETH and BTC are in a better position to recover because their open interest have collectively dropped.

Bitcoin, in particular, saw its futures open interest drop to levels unseen since March 8 on Binance, which consitently records the highest derivatives trading volume for BTC.

Kimchi premium hits 0%

As the price of Bitcoin and Ether plummeted, the Kimchi premium in South Korea fell back down to 0%.

The premium is now over 4%, but the South Korean cryptocurrency exchange market saw a steep sell-off following a negative statement from the nation’s financial watchdogs.

On April 22, Eun Sung-soo, the financial commissioner of South Korea, said that the government is taxing cryptocurrencies but they are not financial assets and the government would not protect them.

The unexpected statement from South Korea’s financial watchdog likely led to a major sell-off in the South Korean cryptocurrency exchange market, causing the Kimchi premium to collapse. 

Small to medium-size whales are selling

On April 20, the Material Indicators team, who tracks the trade flow of Bitcoin on major exchanges, said that small to medium-size whales were selling.

The analysts said:

“While $1M+ people keep buying dips no matter what, $100k – $1M guys have set lower highs and lower lows on their orderflow.”

This trend was particularly significant because large whales were accumulating Bitcoin in the same period.

The selling pressure put on by small to medium size whales, who were selling between $100,000 to $1 million worth of Bitcoin on major exchanges, intensified the short-term downturn of Bitcoin.

Biden tax concerns

The timing of the Bitcoin price plunge also coincided with the release of U.S. President Joe Biden’s plans to raise taxes on wealthy individuals.

The U.S. stock market dropped as the Dow Jones declined by more than 1% on April 22 in a single trading session.

Holger Zschaepitz, a market analyst at Welt, said at the time:

“OUCH! Dow plunges 400 points on fears of higher capital gains taxes. BBG reports that Biden is planning a capital gains tax hike to as high as 43.4% for wealthy Americans. Proposal would hike capital gains rate to 39.6% for those earning >$1mln, up from 20% currently.”