The cryptocurrency market performed poorly in weekend trading, and on Monday, the trading price of Bitcoin continued to remain below $63,000. The launch of a virtual asset ETF in Hong Kong is imminent, and investors are waiting for it to bring more liquidity to the crypto market. However, analysts warn that the lack of positive catalysts, coupled with increasing concerns about US inflation, may lead to further price declines.
According to data from CoinPush, Bitcoin broke below the support level of $63,600 in the early hours of Monday, falling to an intraday low of $61,750 in the afternoon. Bullish momentum prevented further decline, and Bitcoin briefly rebounded above $63,000. However, at the time of writing, it fell below $63,000 again, with a 1% decline in the past 24 hours.
In the face of Bitcoin’s weakness, altcoins have suffered heavy losses. On Monday, only 10 out of the top 200 tokens by market capitalization experienced gains. Amp (AMP) performed the best with an increase of 18.75%, followed by BinaryX (BNX) with a 6.4% increase, and Helium (HNT) with a 5.7% increase.
The current total market capitalization of cryptocurrencies is $2.32 trillion, with Bitcoin’s dominance rate at 53.4%.
US stocks experienced significant volatility during the day, starting with an upward trend at the opening, but then falling under pressure, with major indices losing their gains around noon. This decline occurred after the US Treasury increased its estimated federal borrowing for the quarter by $41 billion to $243 billion.
As a result, the 10-year Treasury yield fell to 4.613% earlier in the trading day before rising to 4.65%. It then continued to decline, with a trading price of 4.607% at the time of writing. At the close, the S&P, Dow Jones, and Nasdaq all ended higher, rising by 0.32%, 0.38%, and 0.35% respectively.
Hong Kong’s spot cryptocurrency ETF is about to debut
Hong Kong’s spot Bitcoin and Ethereum ETFs will begin trading on Tuesday morning local time. As of the time of publication, there has not been a similar enthusiastic response in terms of price and trading volume as the US spot Bitcoin ETF. In the three months before the US spot Bitcoin ETF debuted on January 11, the price of BTC nearly doubled, and a large amount of capital flowed in, stimulating BTC to break through $73,000 in March.
However, the Hong Kong issuers expressed confidence. According to a report by Zhixin Finance, Zhu Haokang, the director of Huaxia (Hong Kong) Digital Asset Management and Family Wealth Management, stated that except for Grayscale, the other 10 US spot Bitcoin ETF issuers had an initial issuance scale of $125 million on the first day in January. The initial issuance scale of the three issuers in Hong Kong will exceed this number, with Huaxia Fund being the largest among the three.
Unlike US products, Hong Kong’s spot ETF allows cash and physical subscriptions or redemptions. Huaxia’s ETF is the only one that provides three counters for US dollars, Hong Kong dollars, and Chinese yuan, and it is also the only issuer with non-listed shares. Many traditional cryptocurrency investors have actively participated in its initial offering stage, including Bitcoin miners, investors from regions outside Hong Kong such as Singapore and the Middle East, and local family offices.
Analysts predict that the asset management scale of Hong Kong’s spot Bitcoin and Ethereum ETFs is expected to reach $1 billion in the future, but it will take time to verify whether this target can be achieved.
Focus on key economic data this week
Looking at the broader market, Secure Digital Markets stated, “The focus of the market is on upcoming corporate earnings reports, important employment data, and the Federal Reserve meeting.”
They pointed out, “This week’s earnings focus includes major reports from PayPal and Amazon on Tuesday, as well as major financial reports from Apple, Coinbase, and Block on Thursday. Monetary policy will also attract market attention, with the expectation that the Federal Reserve will announce keeping interest rates unchanged on Wednesday. Although no change in interest rates is expected, investors will closely watch Chair Jerome Powell’s speech at the subsequent press conference.”
Analysts concluded, “This expectation was formed before the release of the April non-farm payroll report on Friday, which is a key indicator of labor market strength and a crucial factor in Fed policy decisions and overall economic assessments.”
Bullish target: above $67,500
Analysts stated, “Bitcoin is currently showing a downward trend, with lower highs and lower lows on the intraday chart, rebounding from today’s low of $61,800. It is still under pressure from the 20-day and 50-day moving averages, indicating a bearish momentum.”
Uncertainty about future interest rates is the main source of volatility. Analysts wrote, “The combination of weak growth and persistent inflation has reduced the possibility of a rate cut by the Fed, casting a shadow over risk assets. Bulls need to rebound above $67,500 to regain dominance.”
The reversal of ETF flows has also put pressure on Bitcoin’s price, translating into weakness in the entire cryptocurrency market. Last Friday, there was a significant outflow of funds from Bitcoin ETFs, with a total outflow of $83.6 million, of which Grayscale alone saw an outflow of $82.4 million. BlackRock faced the third consecutive day with no inflows.
Economist and cryptocurrency trader Milkybull Crypto stated that Bitcoin’s current weakness may be the “last shakeout before rebounding to the top of the cycle.”
He stated, “If you observe the price action in 2017, when it broke a new record, you will find that there was a healthy, liquidity-attracting pullback before it rebounded to the top of the cycle.”
Milkybull Crypto added, “The consolidation that started from December 2023 to February 2024 also reflects the current consolidation range, and MM’s manipulation strategy is to get rid of STH, which is very sensitive to price adjustments, especially when the price is below its cost basis. The liquidity battle zone is $57,000 to $59,000; STH cost basis is $59,788, these are important areas to observe during the final shuffle.”
Author: BitpushNews Mary Liu