The previous weakness continued to affect the price trend of the cryptocurrency market on Wednesday, and Bitcoin faced significant downward pressure. According to Bitpush terminal data, after reaching a high point near $65,540 in the early morning of the US Eastern Time, Bitcoin declined throughout the trading day, hitting a low of $59,640 (a drop of 18% compared to the peak in March), and then rebounded slightly to above $60,000. At the time of writing this article, the trading price was $61,434, with a 24-hour decrease of 3.1%.
The altcoin market experienced a decline earlier in the day, followed by a rebound in the afternoon, with mixed performance and fluctuating values among the top 200 tokens by market capitalization. Among them, Injective (INJ) led the gains with a rise of 14.8% to $27.93, Book of Meme (BOME) rose 14.2%, and Sui (SUI) rose 12.3%. Mantra (OM) had the largest decrease, falling 11.4%, followed by Saga (SAGA) with a 10.1% decrease and Echelon Prime (PRIME) with a 9.4% decrease.
Currently, the total market capitalization of cryptocurrencies is $2.24 trillion, with Bitcoin’s dominance rate at 53.6%.
Due to traders’ assessment of the risks brought to the market by the Middle East conflict, US stocks opened high but fell. The uncertainty of interest rate timing also led to investors hesitating to increase their exposure to risky assets, further contributing to the weakness. At the close, the S&P, Dow Jones, and Nasdaq indexes all declined, with decreases of 0.58%, 0.12%, and 1.15%, respectively.
Have institutions paused buying Bitcoin?
Stockmoney Lizards analysts stated in a post on X that Bitcoin’s further downward trend aligns with the Wyckoff analysis method. As shown in the chart below, Bitcoin’s recent price movements resemble the trends typically seen in the formation process of the Wyckoff distribution model, and as of April 17, 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, in the case of Bitcoin, the insufficient demand is due to the Federal Reserve’s long-standing high-interest rate policy and escalating conflicts between Iran and Israel, leading to increasing risk aversion.
The analysts believe that “large institutions have currently paused buying” and added, “The inflow of ETFs is at an unprecedented low. Our guess is that they feel a difficult period for the market could be coming.”
Data from Farside Investors shows that since the outbreak of the Iran-Israel conflict on April 12, US-based Bitcoin spot ETFs have seen outflows of nearly $150 million.
USD strength = Crypto weakness
As Bitcoin and the broader financial market experience weakness, the US dollar has seen its best five-day rally since February, rising over 2% since April 10. At the time of writing this article, the US Dollar Index (DXY) was trading at 106.23, the highest level since November 2.
Historically, higher interest rates have led investors to seek higher returns by buying US Treasury bonds and fixed deposits, thereby increasing demand for the US dollar. This is reflected in the recent rise of the US Dollar Index.
Market analyst Bitcoin Schmitcoin pointed out in a post on X that the DXY index moves in the opposite direction of the crypto market. He believes that “crypto bull market = DXY bear market; crypto bear market = DXY bull market; crypto market top = DXY bottom; crypto market bottom = DXY top. Although DXY is consolidating, it is an indicator of crypto/stock volatility.”
This raises the question: Will the halving become a sell-off news event?
Bitcoin Schmitcoin stated, “We see major stock markets potentially forming tops, and after clearing a decade-long consolidation, the US dollar is showing tremendous strength. All of this indicates that we are starting to see investors turning 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, although I want to be bullish on BTC, it’s really hard for me to stay in the bullish camp. Remember my words: if the US Dollar Index starts to rise, everything else will fall as a result.”
The price reaction to the 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 on whether the BTC price will retrace 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 significant percentage gains observed in the past could be challenging.
He said, “Price reactions typically do not happen immediately, and historically, the major growth after halvings has taken place 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 size and liquidity of the Bitcoin market, it may be difficult to replicate the huge percentage gains observed in previous halvings.
Author: Mary Liu from Bitpush.news