- Bitcoin has been over $27,000 for the previous few days.
- The bulls effectively halted Ether’s fall around the $1,850 support level.
- The Totalcap(marketcap) has reached its lowest point of $1.10 trillion.
- On a daily scale, most of the alts with bigger market caps are in the red.
- Ripple, Cardano, Dogecoin, Solana, Polkadot, and Polygon are all digital currencies. MATIC has fallen the most, and it is now worth less than $1.
- The market decline began when U.S. Federal Reserve officials hinted at another quarter-point rate hike in May.
- The Fed’s move lowered bitcoin and gold prices, while higher rate predictions boosted the dollar.
- The Crypto Fear and Greed index is at 50, which is considered neutral.
Bitcoin and a few other cryptocurrencies are in the possibility of going below their respective support levels, triggering a further downturn. Bitcoin has been over $27,000 for the previous three days, but its 8% fall last week frightened some novice traders and long-term bulls. Market players are split on how the issue will play out – some believe the crisis will worsen, while others believe the multi-month highs will be retested.
Catalysts might come in the shape of macroeconomic data from the United States later this week, while markets are also bracing for the next Federal Reserve interest rate decision. Spot premium has returned to former levels when trading in this price range. Across the board, funding rates are somewhat negative. The S&P 500 index (SPX) has retreated to 4,090+, suggesting that bears are selling rallies around 4,200.
The main macro triggers for the week are the releases of economic statistics in the United States and business earnings.
On April 27, they will focus on the GDP, the number of unemployed people, and the Personal Consumption Expenditures (PCE) Index reading for March. While the Federal Open Market Committee (FOMC) meeting in May, when the Fed will deliberate on its next interest rate adjustments, looms on the horizon, corporate profits will also continue. Currently, there is a strong majority in favor of another rate increase, which will put more pressure on American banks and the larger financial system.
A statistical correlation of 0.2 with broad changes exists between the S&P 500 Index, represented by SPX, and Bitcoin, represented by BTC-USD. Between early January 2022 and the beginning of November 2022, Bitcoin’s average correlation was 0.69. It seems sense that if the market experiences volatility and poor returns again, as it did last year, there may be another instance of positive correlation in which the underlying trend tracks the stock market downturn. It almost followed the market exactly.
The idea that Bitcoin is a countercyclical asset is debunked by this. To do better, look to other segments of the market like commodities, gold, or short-term credit.
The cryptocurrency fear and greed index has leveled out:
The new drop in the price of Bitcoin could have a positive effect on the crypto market as a whole. The Crypto Fear & Greed Index shows that the mood on the market is quickly returning to a more normal level.
Before, Fear & Greed was at its highest level since November 2021, around the same time Bitcoin reached its latest all-time high. Some people worried at the time that this might not be able to last and could lead to a quick market downturn if traders got too comfortable and bet that the market would keep going up without any problems.
As of April 24, the Index moved out of the “fear” zone and into the “neutral” zone, giving it a score of 53 out of 100. This number is about the least “greedy” since the middle of March.
Bitcoin Price Analysis:
As we talked about in our last post, Bitcoin fell from $31,000 to $27,812 and touched $27,000. The $28,500 support level was broken, so it will now act as a resistance level going forward. The bears will try to protect the area between $29,500 and $28,500 and push the price down to $24,719. For the next few days, Bitcoin’s price may range a bit, staying between range highs of $28,150 and range lows of $27,000. This shows that bulls and bears have no consensus on which way to trend. As the bears will make an effort to hold on to $28,500, the bulls would buy dips around $27,000. Since the next set of financial data is due, the uncertainty probably won’t last too long. The BTC/USDT pair could then fall to a key support level between $25,000 and $24,719. The bulls ought to defend this level with everything they have. The above bearish scenario will be invalidated if a candle closes above the $29,500 price level.
Concluding Thoughts:
The macroenvironment is far from obvious. One of the main reasons for allocating money to Bitcoin (BTC-USD) is that when the fiat monetary system is under pressure, individuals will abandon the US dollar and US-denominated assets (including equities) and seek shelter in Bitcoin. In 2022, Deutsche Bank, Goldman Sachs, and others joined the chorus, declaring Bitcoin to be the new 21st-century gold. That myth is still alive and well, especially among the younger generation. However, Bitcoin and other major cryptocurrencies exhibit increased volatility and, as a result, will either outperform or drastically underperform the index during times of market stress. Let’s not forget that Bitcoin saw a -70+% drop in 2018 (when equities markets fell) and a catastrophic -80+% drop in 2022. However, one very successful investing strategy would be to short Bitcoin futures and buy bitcoin in spots in anticipation of the next recession and the 2024 halving event.
