On Tuesday, the crypto market and the US stock market continued their downward trend. By the end of the day, the S&P 500, Dow Jones, and Nasdaq Composite Index all suffered significant losses, with the Dow Jones falling nearly 400 points, marking the worst quarterly start since 2020.
The rise in borrowing costs weakened the stock market’s upward momentum and put pressure on the S&P 500. The 10-year and 30-year US Treasury bond yields reached their highest levels since early November.
Bitcoin
On Tuesday, Bitcoin briefly fell below $65,000, hitting a intraday low of $64,591.50. By the end of the US stock market session, the price had slightly recovered above $65,000. In the past 24 hours, the entire cryptocurrency market has fallen by 3.9%. Among the mainstream currencies, Bitcoin (-5.68%), Ethereum (-6.43%), and Dogecoin (-10.33%) led the decline.
The meme coin sector plummeted by about 17% in the past 24 hours.
The US government transferred nearly $2 billion worth of Bitcoin to Coinbase, raising concerns about selling pressure. Market participants have been closely watching the US government’s Bitcoin address transfers, as any selling action could potentially impact the price of cryptocurrencies. Typically, an increase in the amount of Bitcoin flowing into exchange wallet addresses would increase selling pressure and trigger a decline in asset prices.
According to data from Arkham Intelligence, on April 2, 2024, the US government executed a Bitcoin transfer involving nearly $2 billion, sending the tokens to Coinbase Prime addresses in multiple transactions. The transfer amount was 30,174.70 BTC, successfully processed at block height 837,413.
In recent years, the US Department of Justice has accumulated a large amount of BTC through the seizure of events such as Silk Road, Bitfinex hack, and the James Zhong case. The last confirmed sale was in March 2023, when the government sold approximately 50,000 Bitcoins related to the Silk Road website seized at the end of 2022 for a price of $216 million, equivalent to 9,861 Bitcoins.
As of April 2, 1:10 PM Eastern Time, the US government still holds 215,246 BTC (worth $14 billion) and 50,147 ETH (worth $163 million).
Bitcoin had already experienced a significant decline on the day, and after the news came out, it further fell below $65,000 before experiencing a slight rebound.
Cryptocurrency analyst and commentator Phyrex commented on the X platform, “This sell-off that entered the exchange has reportedly already been completed, and now it’s just the settlement. If that’s the case, it depends on the settlement price and the choices of new holders.”
Impact of Fed Rate Cut Expectations
Analysts said that the changing expectations around the pace of Fed rate cuts have made traders uneasy. According to data from CME Group, federal funds futures indicate a 40% chance that the Fed will keep interest rates at current levels until June.
Yesterday, US manufacturing data was stronger than expected. But a Fed official said that three rate cuts in 2024 still seemed reasonable.
Loretta Mester, President of the Cleveland Fed, said on Tuesday that she still expects three rate cuts this year, as part of the quarterly economic forecast submitted at last month’s Fed meeting, which makes Mester a slight majority among the 10 officials who expect at least three rate cuts this year. According to the most likely economic forecast, nine officials believe that two or fewer rate cuts may be appropriate.
Mary Daly, President of the San Francisco Federal Reserve Bank, stated in a speech that three rate cuts this year are a reasonable baseline scenario and that three rate cuts are a forecast, not a commitment.
Bitcoin Price Must Maintain $65,000
Cryptocurrency analyst Rekt Capital stated in an article on April 2 that Bitcoin has failed to complete a retest after a breakout, and as the Bitcoin halving approaches, the price trend will continue to slow down.
Rekt stated, “Bitcoin has failed to complete a retest after a breakout. Technically, Bitcoin could still recover to above its historical high of around $69,000 before the close of the new weekly candle.” The analyst added that the Bitcoin price needs to stay above the weekly low of $65,600 to avoid further losses.
According to data from Coinglass, if the Bitcoin price falls below the key level of $65,000, all long leveraged positions on exchanges worth over $249 million will be liquidated.
Technical analyst Lockridge Okoth stated that if the Bitcoin price falls below the support level of the 200-day exponential moving average (EMA) at $65,556 (which has been crucial since October), the decline could extend to $60,800.
Conversely, if the 200-day moving average holds as support, the Bitcoin price will bounce back. Breaking the support level of $69,000 would indicate more buying orders, increasing the chances of further upward movement, with the first target being the peak of $73,777 and then the possibility of setting a new high above the $74,000 range.
Andrey Stoychev, head of Nexo’s institutional brokerage business, attributed the Bitcoin price adjustment primarily to new users entering the Bitcoin market in the two months since the approval of the US spot ETF. Stoychev expects a short-term adjustment as new entrants want to invest in Bitcoin.
He said, “The Bitcoin bull market has brought returns, with three out of the four cycles surpassing previous highs. Looking back at 2020, Bitcoin surged 250% within just four months after breaking its all-time high. This suggests that if history repeats itself in this cycle, Bitcoin’s potential trajectory will reach $231,000.”
Author: Mary Liu from Bitpush News
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