As a professional translator, I would translate this news article into English as follows:
Under the countdown of less than 24 hours, it seems that the market is really going to experience a “halving of asset prices” wave.
Written by Frank, Foresight News
“The cannon fires, and gold is worth ten thousand taels?”
This morning at around 9:00, breaking news headlines dominated the front page with reports of “a strong explosion near the Iranian capital Tehran” and “explosions heard in Iran, Syria, and Iraq.” The tension in the Middle East between Israel and Iran has escalated once again, and the price of gold quickly broke through $2,400, soaring for five consecutive weeks.
At the same time, Bitcoin, which was once considered “digital gold,” went against the trend and continuously fell below the integer thresholds of $63,000 USDT, $62,000 USDT, and $61,000 USDT, and even briefly dropped below $60,000 USDT, reaching a recent low of $59,587 USDT (OKX spot data, same below). Ethereum also experienced continuous drops, falling below $3,000 USDT, $2,900 USDT, and reaching a low of $2,864 USDT.
According to Coinglass data, over $100 million worth of positions were liquidated in the past four hours, with long positions liquidated for $94.57 million. The altcoin market is also in despair, with numerous cryptocurrencies experiencing significant drops in the past two weeks.
Interestingly, as of the time of writing, OKLink data shows that the fourth Bitcoin halving is less than 22 hours away. However, the market seems to have poured cold water on everyone in the form of an “early halving of assets,” making market expectations even more pessimistic.
Whether this round of decline is a trend reversal or a medium-term correction has become the key for everyone to participate in the future market trends.
Multiple Reasons for the Sharp Decline
The possible reasons for the significant decline can be summarized into two dimensions: external factors such as geopolitical conflicts and the collective hawkish turn of the Federal Reserve, as well as internal factors such as outflows from ETFs.
Impact of Middle East conflicts on the global financial market
First and foremost is the impact of Middle East geopolitical conflicts on the global financial market. We need to clarify one thing: since institutional investors entered the market last year, especially after the introduction of spot ETH earlier this year, the “safe-haven” attribute of Bitcoin has become somewhat mystical. In essence, it is a “risk asset” that is more closely linked to the global macro environment and bull-bear cycles (recommended reading: “Under Geopolitical Turmoil: A Cryptocurrency Investment Guide”).
The ongoing conflict between Iran and Israel in the Middle East has to some extent increased the possibility of geopolitical risks affecting global oil supplies. After the latest conflict news this morning, the price of WTI crude oil futures in the United States rose by more than 2.5% intraday, reaching as high as $85 per barrel, and Brent crude oil futures prices also rose to over $89 per barrel.
If the conflict escalates and involves nuclear facilities on both sides, it may lead to a sustained rise in oil prices, which will undoubtedly worsen the United States’ anti-inflation process and increase the possibility of the Federal Reserve continuing to raise interest rates. Therefore, it seems reasonable for Bitcoin, as a “risk asset,” to decline under the influence of strengthening rate hike expectations.
Meanwhile, this has also cast a shadow over the recently turbulent US stock market. Influenced by this morning’s news, futures for the three major US stock market indices fell further, with Nasdaq 100 index futures dropping by more than 2%, S&P 500 index futures falling by 1.5%, and Dow Jones index futures declining by 1.32%.
Hawkish stance of the Federal Reserve
In addition, over the past two months, the market’s expectations of a mid-year interest rate cut by the Federal Reserve have been shaken, mainly because more and more senior officials of the Federal Reserve have started talking about “rate hikes.” First, the vice-chairman of the Federal Reserve, William Williams, warned that if the data showed that the Federal Reserve needed to raise rates to achieve its goals, it would do so. Atlanta Fed President Bostic also expressed an open attitude toward rate hikes if US inflation rises.
What’s more important is that in Powell’s speech this week, he also mentioned that inflation lacks further progress, and it might be appropriate for higher interest rates to continue to play a role for a longer period of time. Nick Timiraos, a Wall Street Journal reporter who has been seen as the “new Federal Reserve communication agency,” commented that the Federal Reserve’s outlook has clearly changed, which seems to have shattered their hopes of “taking the initiative” to cut rates.
It is worth noting that at the end of last year and the beginning of this year, the market expected the pace of interest rate cuts by the Federal Reserve in 2024 to be 5-7 times, with the first rate cut expected to take place in March… This has prompted US bond yields to soar again, with the 10-year yield surpassing the 4.75% level, and Wall Street investment banks even warning of a possible return to the “5% era” in the short term.
In addition, a series of financial-related data has been released in the United States since April, including retail sales data, initial jobless claims, non-farm employment data, etc., all of which have shown strong performance. Regardless of the credibility, at least from a data perspective, it has provided room for rate hikes again.
In this context, it is reasonable for some risk capital to make adjustments to their positions.
Continuous net outflows from ETFs for 5 consecutive days
Furthermore, there is a signal worth noting. According to SoSoValue data, Bitcoin spot ETF saw a net outflow of $23.15 million on April 18, marking 5 consecutive days of net outflows.
As of the time of writing, the total net asset value of the Bitcoin spot ETF is $52.41 billion, with a net asset ratio (market value relative to the total market value of Bitcoin) of 2.82%, and a historical cumulative net inflow of $12.24 billion.
It is particularly noteworthy that Ethereum has already fallen to near the 120-day moving average, and the weekly chart of BTC/ETH has seen three consecutive bearish candles, presenting an extremely unattractive pattern.
It is worth noting that the 120-day moving average has always been regarded as one of the most important bull-bear dividing lines. Therefore, whether Ethereum can hold onto this trendline and rebound strongly, as well as the subsequent performance of Bitcoin, becomes particularly crucial.
Tags:
2023 Market
OKX
Ethereum
Futures
Bitcoin
Federal Reserve
Gold
Source Link:
https://foresightnews.pro/article/detail/58437
Note: The translated content represents the author’s viewpoint and does not constitute investment advice.
Original Article Link: https://www.bitpush.news/articles/6622752
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