According to the data of CoinMarketCapSince the beginning of this year, Bitcoin’s trading range has mostly hovered around 35,000-45,000 USD.
Therefore, when Bitcoin hits the 47,912 USD and set a new peak in 2022 at the end of March, investors and economists were expecting a breakout from the worst period.
For the first time in a year, the Fear and Geek index hit 56 points, reflecting the neutral sentiment mixed with investors’ hopes. This is also the factor that pushes the RSI to surpass the 70 mark and put Bitcoin in the overbought zone.
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April “red fire”
End of March, Bitcoin officially had the second month of positive growth. However, entering April, the world’s largest cryptocurrency suddenly turned down and broke the bottom 40,000 USD and shows no sign of stopping.
Bitcoin’s capitalization now shrinks to 750 billion USD. With a 41% dominance rate, Bitcoin’s volatility has also dragged down the total market capitalization to 1.830 billion USD.
Bitcoin took 13 days to climb from 40,000 USD reached the top of the year and took the same amount of time to return to the starting position. So far, the Bitcoin price in April has dropped 11.93%.
This day last year, Bitcoin sent the world crypto markets reeling and created a wave of FOMO when it set its first ATH at lows. 63,503 USD. However, this was also the time when the digital currency started to correct sharply and each lost 53%.
According to data from CoinGlassBitcoin price from April-June 2021 decreased by 1.98%, 35.31% and 5.95% respectively.
Notably, the price movement of Bitcoin is having a certain correlation with the US stock market. Ending the trading session on April 11, the Dow Jones fell 413 points, or 1.19%; The S&P 500 fell 75.5 points, or 1.69%; The Nasdaq 100 fell 299 points, or 2.18%.
Digital asset trading platform eToro shows that the number of days of similar volatility in Bitcoin that the S&P 500 index accounts for is 77%, 13% higher than in 2021.
Inflation has escalated in the US and may reach 8.4% in March, the highest level since 1982, further reinforcing the Federal Reserve’s plan to raise interest rates.
The pressure to tighten monetary policy is negatively affecting the crypto market in general. Economists predict that the Fed will raise interest rates by half a percentage point at its next meeting in May and another half point in June if the situation does not improve.
“Fed tightening by 0.5 percentage points in upcoming meetings as well as cuts 95 billion USD each month on the balance sheet has caused the crypto market to spiral downward,” said Teong Hng, leader of Satori Research.
According to Michael Novogratz – billionaire crypto investor and leader of Glaxy Digital Holdings – Bitcoin can only rise again when the Fed halts its plans to raise interest rates.
Under the direction of Jerome Powell, the Fed proved to be relatively strong in the face of inflation in the US. But, the Fed will be forced to loosen these policies in case the economy slows down.
Edward Moya – senior market analyst from OANDA (based in the US) – thinks that Bitcoin needs to see concerns about global growth in the next few months.
“There is still too much uncertainty like the Ukraine war or the overall impact from inflation and growth. Bitcoin needs a healthy risk-averse environment to get back to record highs.”
The analyst added:
Bitcoin needs a healthy risk-on environment to recapture record highs.
The move to raise interest rates is a huge blow to Bitcoin. Therefore, the fact that governments around the world adjust interest rates to stimulate the economy will be one of the factors that put Bitcoin back on track.
Until then, investors will continue to be wary of this risky market. So far, the Fear and Geek index has more than halved to 20 points, its lowest level since February.
Similarly, data from investment firm CoinShares shows that there are 134 million USD pulled out of digital asset funds last week. This is also the second largest cash outflow this year. In which, flows from Europe accounted for 39% and America accounted for 61%.
May continue to decrease deeply
Compared to the peak reached in November 2021, the value of Bitcoin has evaporated an average of 42%. According to financial expert Craig Erlam from OANDA (UK-based), Bitcoin is unlikely to return to its old peak.
“Previously, Bitcoin reached that level thanks to a combination of factors such as mass coverage or institutional interest and speculation. After all, Bitcoin is a high-risk asset. Therefore, the digital currency needs a combination of these things again with an improved risk appetite,” said Erlam.
Recently, the market has not recorded any positive signs except for the massive purchase of Bitcoin by Luna Foundation Guard (the custodian fund for stablecoin UST of the Terra founders) and the investment company. from MicroStrategy. These are also 2 funds among the 5 largest Bitcoin holding funds in the world with a total value of about 7.1 billion USD.
On the morning of April 11, Arthur Hayes – former CEO of BitMex exchange – confirmed that in terms of technical and macro aspects, Bitcoin will bottom in the second quarter.
Bitcoin’s 90-day correlation with the Nasdaq 100 is at a record high. In addition, the state of technology stocks being weighed down and the prolonged war in Ukraine made the market go in a bad direction.
Therefore, Hayes predicts Bitcoin and Ethereum could bottom out at ., respectively 30,000 USD and $2,500.
“There are a lot of crypto market experts who believe that the worst is over. However, I believe they are ignoring the fact that the market price of cryptocurrencies now acts as an index for the S&P 500 and Nasdaq 100,” commented the former CEO of BitMex exchange.