In the geopolitical tension, the cryptocurrency market experienced significant volatility over the weekend and continued to decline on Monday.
Bitcoin
Bitcoin briefly approached $67,000 in the early morning hours on the East Coast of the United States, but the bulls lost momentum and it dropped to a low point near $62,380. As of the time of writing, the Bitcoin trading price is $62,976.73, with a 24-hour decline of 1.4%.
Ethereum
Ethereum broke below the $3,100 mark, with a 24-hour decline of 1.42%.
With the stagnation of Bitcoin, altcoins slid. The majority of the top 100 altcoins by market capitalization declined in the past 24 hours. Core DAO (CORE) led the gains with a 59.64% increase, followed by Bitcoin BEP2 (BTCB) with a 28.84% increase, and OKB with a 12.37% increase. Starknet Token (STRK) had the largest decline at 8.64%, followed by Bittensor (TAO) with an 8.09% decline, and Ethena (ENA) with a 7.57% decline.
The three major U.S. stock indexes also experienced a general decline. At the close, the S&P, Dow, and Nasdaq indexes all fell, with declines of 0.62%, 0.65%, and 1.79% respectively.
ETF flows turned negative, but the approval of spot products in Hong Kong may bring a boost.
As investors became more hesitant, ETF funds entered negative territory. According to CoinShares’ weekly report on digital asset fund flows released on April 15, digital asset investment products saw outflows of $126 million last week. This is the first week of outflows since the record $1 billion outflow in the week of March 22.
In terms of regions, the largest outflow of funds was from the United States, at $145 million, followed by Canada and Switzerland with outflows of $6 million and $5.7 million respectively.
In terms of assets, Bitcoin investment products saw the largest outflow of funds, reaching $110 million. However, it still maintained a net inflow of $555 million for the month. James Butterfill, Research Director at CoinShares, said, “Short Bitcoin products broke the three-week streak of outflows and saw a slight inflow of $1.7 million, which may be due to investors taking advantage of the recent price weakness.”
On the other hand, Ethereum investment products were hit the hardest, with outflows of $29 million last week, marking the fifth consecutive week of outflows.
However, the approval of spot ETF products in Hong Kong may bring a boost to the market. According to Caixin, publicly offered fund companies Bosera International, Huaxia Fund (Hong Kong), and CSOP Asset Management disclosed on April 15, 2024, that they have obtained preliminary approval from the Hong Kong Securities and Futures Commission to issue virtual asset spot ETF products. After approval, the products to be issued will include not only Bitcoin but also Ethereum, which has not yet been approved by the U.S. SEC. It is rumored that these virtual asset spot ETF products are expected to be listed at the end of April at the earliest, making them the first Bitcoin spot ETF and Ethereum spot ETF in Asia.
Eric Balchunas, an ETF analyst at Bloomberg, commented that it is expected that the Hong Kong spot Bitcoin ETF will not have a large inflow (analysts estimate $25 billion), and the estimated scale of capital inflow may be $500 million. The reasons are as follows: 1. The Hong Kong ETF market is small, with only $50 billion, and mainland Chinese people cannot purchase it, at least not through official channels. 2. The three approved spot Bitcoin ETF issuers (Bosera, Huaxia, CSOP) are relatively small in size and do not have large institutions like BlackRock participating. 3. The liquidity/efficiency of the underlying ecosystem is low, which may lead to larger price spreads and premium discounts for these ETFs. 4. The transaction fees may be 1%-2%, which is higher compared to the U.S. spot Bitcoin ETF.
However, Eric Balchunas emphasized, “All of this is obviously positive for Bitcoin as it opens up more investment avenues. I’m just saying it’s ‘child’s play’ compared to the U.S. In the long run, some of these issues may disappear, with more liquidity, smaller spreads, lower fees, and more issuers participating. But in the short/medium term, our expectations are more modest.”
The adjustment will continue
CryptoQuant analysts believe that there is a high possibility of further correction in the Bitcoin price. This is supported by various factors, including a higher average 30-day funding rate, resistance at the current historical high, and the market setting that allows “large participants to establish large positions.”
CryptoQuant analyst Gaa stated in the report, “Historically, when retail investors engage in large-scale profit-taking, it indicates a potential top formation. After the rapid price decline in the past two days, these holders sold off large amounts of their holdings to cash in.”
QCP Capital, a Singapore-based digital asset trading firm, stated in a report to investors that historically, buying on dips during major geopolitical conflicts has been a profitable trade.
Ed Goh, Head of Trading at liquidity provider B2C2, stated that the company has seen continued buying pressure for BTC, especially during the weekend decline, with 57% of the platform’s funds flowing to buyers. The analyst added that altcoin activity is still high, with investors inclined to buy altcoins.
The current overall market capitalization of cryptocurrencies is $2.32 trillion, with Bitcoin dominance at 53.66%.
Author: BitpushNews, Mary Liu
