The previous weakness continues to affect the price trend in the cryptocurrency market on Wednesday, and Bitcoin is facing significant downward pressure. According to Bitpush Terminal data, after reaching a high point near $65,540 in the early morning of the U.S. Eastern Time, Bitcoin has been declining throughout the trading day, hitting a low of $59,640 (an 18% drop compared to the peak in March), and then bouncing back slightly to above $60,000. As of the time of writing this article, the trading price is $61,434, with a 24-hour decline of 3.1%.
The altcoin market experienced a downward pressure earlier in the day, followed by a rebound in the afternoon, with mixed performance among the top 200 tokens by market capitalization. Injective (INJ) led the gains, rising by 14.8% to $27.93, Book of Meme (BOME) rose by 14.2%, and Sui (SUI) rose by 12.3%. Mantra (OM) experienced the largest decline, falling by 11.4%, followed by Saga (SAGA) with a 10.1% drop, and Echelon Prime (PRIME) with a 9.4% drop.
Currently, the total market capitalization of cryptocurrencies is $2.24 trillion, with Bitcoin’s dominance rate at 53.6%.
Due to the evaluation of the risks brought by the Middle East conflict to the market, U.S. stocks opened high and fell low. The uncertainty of the timing of interest rate cuts has also caused investors to hesitate in increasing exposure to risk assets, further weakening the market. At the close, the S&P, Dow Jones, and Nasdaq indexes all fell, with declines of 0.58%, 0.12%, and 1.15% respectively.
Have institutions stopped buying Bitcoin?
According to analysts at Stockmoney Lizards, the downward trend of Bitcoin aligns with the Wyckoff analysis method. As shown in the chart below, the recent price movements of Bitcoin resemble the trends typically seen in the formation process of the Wyckoff distribution model. As of April 17th, BTC has entered the “signs of weakness” phase of this pattern.
This phase indicates a weakening demand, which in turn leads to asset price declines. StockMoney Lizards believes that for Bitcoin, the lack of demand is due to the Federal Reserve’s long-standing high-interest-rate policy and the escalating conflict between Iran and Israel, which has led to increasing risk aversion.
Analysts believe that “major institutions have currently paused their purchases” and added, “The inflow of ETFs is at an unprecedented low. Our guess is that they feel that a difficult period for the market may be coming.”
Data from Farside Investors shows that since the outbreak of the Iran-Israel conflict on April 12th, the U.S. spot Bitcoin ETF has seen outflows of nearly $150 million.
Stronger U.S. dollar = Weaker crypto
As Bitcoin and the broader financial market weaken, the U.S. dollar has experienced its best five-day gain since February, rising over 2% since April 10th. As of the time of writing this article, the U.S. Dollar Index (DXY) is trading at 106.23, its highest level since November 2nd.
Historically, higher interest rates have led investors to seek higher returns by buying U.S. treasuries and time deposits, thereby increasing demand for the U.S. dollar. This is reflected in the recent rise of the U.S. Dollar Index.
Bitcoin Schmitcoin, a market analyst, pointed out on the X platform that the DXY Index and the crypto market have opposite trends. He believes that “Crypto bull market = DXY bear market; Crypto bear market = DXY bull market; Crypto top = DXY bottom; Crypto bottom = DXY top. Although DXY is consolidating, it is an indicator of crypto/stock market volatility.”
This raises the question: Will the halving become a selling news event?
Bitcoin Schmitcoin said, “We see that major stock markets may be forming a top, and after a decade of consolidation, the U.S. dollar is showing tremendous strength. All of this indicates that we are starting to see investors turn to hedging mechanisms to cope with macro uncertainty. The breakout of the DXY is because people are seeking cash instead of assets. People buy gold because they are hedging. This is not a good sign, and although I want to be bullish on BTC, I really find it difficult to stay in the bullish camp. Remember my words: If the U.S. Dollar Index starts to rise, everything else will fall as a result.”
The price reaction to Bitcoin halving may not happen immediately
With only two days left until the Bitcoin halving in 2024, cautious investors are choosing to adopt a wait-and-see attitude, whether the BTC price will retreat or rebound significantly.
Rikke Staer, CEO of Coinify, stated in a report that the price reaction to the upcoming halving of Bitcoin may take several months, and replicating the large percentage increases observed in the past may be challenging.
He said, “Price reactions typically do not happen immediately, and historically, the major growth after halving occurred within 6-18 months. With the expansion of the market size, statistically, larger price fluctuations become less likely.”
Staer added that due to the current large scale and liquidity of the Bitcoin market, it may be difficult to replicate the huge percentage gains observed during previous halvings.
Author: BitpushNews Mary Liu