Last week, Federal Reserve Chairman Powell emphasized in his speech that the Fed hopes to lower interest rates only after gaining more confidence in the inflation trend, and the strong labor market conditions mean that there is currently no urgency to cut interest rates. Has the convergence of interest rate cuts become the cause of Bitcoin’s recent decline?
(Background:
Bitcoin plummeted this morning, “plunging to $66,000”, with 150,000 people across the network liquidating $470 million
)
(Background supplement:
On the first day of listing, 700,000 investors mourned, netizens laughed: It’s better to buy Bitcoin!
)
Table of Contents:
Traders reduce bets on rate cuts
Decreased liquidity due to holidays
“Smart Money” aims to buy at lows of $62,000
BTC is expected to surge to $150,000 after halving
On the first trading day of the second quarter on Wall Street, the S&P 500 and Dow Jones Industrial Average both declined after new economic data in the United States prompted investors to reduce their bets on interest rate cuts this year. The S&P closed down 0.2% and the Dow Jones fell 0.6%, while the Nasdaq Composite Index rose slightly by 0.1%.
The overall cryptocurrency market declined, with Bitcoin almost testing the key support level of $68,000. It fell to $68,089.00 at one point during the day and remained below $70,000 during the US stock market closing period. It had a 24-hour decline of 1.8%. Ethereum (ETH) fell 1.54% and dropped below $3,600. XRP fell 2.36% and ADA fell 2.63%. According to Coinglass data, the total amount of liquidations in the cryptocurrency market in the past 24 hours reached $316 million, with the majority being long positions, totaling $257 million.
The biggest data point affecting the market today is the ISM Manufacturing Index, which rose 2.5% to 50.3% in March, exceeding all economists’ expectations. A reading above 50% indicates that manufacturing managers believe the manufacturing market is expanding.
Driven by this data, the US dollar index (DXY) broke through 105, the first time since November 2023, with an intraday increase of 0.49%. The yield on US 10-year Treasury bonds reached a two-week high, rising 13.1 basis points to 4.325% during the day.
The ISM report is not government data included in the quarterly economic growth data of the Department of Commerce. However, they are closely watched by investors. Despite higher interest rates in recent years, investors believe that this data indicates good economic performance and that the Federal Reserve may not need to cut interest rates to help the economy. Bond traders are currently pricing the probability of an interest rate cut in June 2024 at less than 50%, which is a shock to the market as investors originally expected up to six rate cuts.
Last week, Federal Reserve Chairman Powell emphasized in his speech that the Federal Reserve hopes to lower interest rates only after gaining more confidence in the inflation trend, and the strong labor market conditions mean that there is currently no urgency to cut interest rates.
Well-known trader Daan Crypto Trades stated that the Easter holiday may be a factor in the recent market downturn.
He stated on the X platform, “Apart from some ETH and other tokens with small quantities, Grayscale has not released any data, which may be related to the market being closed during the Easter period. It is expected that the usual inflow/outflow will reappear starting tomorrow.”
Meanwhile, BTC/USD is currently at its lowest level since March 25th. Daan Crypto Trades believes that breaking below the 200-period moving average within the 4-hour time frame (currently at $67,330) is not impossible. He stated, “The price is testing the 4H/1D trend here, and there is more testing before the price returns above $70,000.”
At the same time, trading firm QCP Capital warned in its latest “New York Color” update sent to subscribers on Telegram that there has been an increase in “downward pressure” in the cryptocurrency spot market. The company stated, “In the past 24 hours, we have seen a strong interest in selling call options and buying put options on BTC and ETH.”
By tracking Binance’s order book liquidity, Material Indicators depicted a BTC price trend from now until the upcoming block subsidy halving.
In a series of posts, Keith Alan, co-founder of Material Indicators, stated, “Although Bitcoin has closed in the green for the seventh consecutive month in its history, the halving does not guarantee an ‘only upward’ trend. Smart Money has lowered its bid to $62,000.”
Alan continued to state that Bitcoin may pose problems for institutional buyers due to its volatility in a relatively unknown territory, but once the halving is over, people will have firm belief in new all-time highs.
He commented, “At least one entity believes this is highly possible, as after the BTC price briefly fell below $69,000, they have lowered their target price for BTC long positions to $62,000. This indicates that even institutional players are unsure of where the price will fall, so they are happy to do DCA holdings in this range, as people strongly believe that new ATH will occur after the halving.”
Mark Yusko, CEO of Morgan Creek Capital, stated in an interview with CNBC that although the price of Bitcoin is still below last month’s all-time high, based on its historical performance, the price of Bitcoin after the halving could surge to $150,000.
He analyzed, “The big moves happen after the halving, and by the end of the year, its trajectory will become more…parabolic. And historically, about nine months after the halving, so sometime around Thanksgiving, Christmas, we will see the peak of the price before the next bear market.”
As for Morgan Creek Capital’s strategy for the bull market, Yusko revealed that they have allocated 80% of their investment portfolio to private equity and 20% to highly liquid tokens, with a focus on Ethereum (ETH), Solana (SOL), and Avalanche (AVAX).
Related Reports
Bitcoin miners profit greatly! Block rewards exceed “8.5 BTC”, on-chain NFT sales boost to $500 million
Chinese money laundering case: UK to confiscate “61,000 BTC” in illicit funds, China protests: China has the right to recover and will not sit idly by
Tether adds 8,888 BTC to its reserves! Total holdings exceed 75,000 coins, leaping to the 7th largest BTC whale