bitcoin (btc) has witnessed a significant drop, falling to $56,556 during Wednesday morning in Europe, marking the lowest point since late February. This slowdown represents the steepest monthly drop since November 2022, with btc falling approximately 7.5% in the last 24 hours and surpassing the previously stable support of $60,000 on Tuesday night.
#1 Reduce risk ahead of today's FOMC meeting
Anticipation and anxiety are high in financial circles as the Federal Open Market Committee (FOMC) will announce its interest rate decision later today. This event is crucial as the cryptocurrency market, particularly bitcoin, has become increasingly reactive to macroeconomic signals.
Recent data, reflecting slowing GDP growth along with persistent inflation, has significantly reduced expectations of interest rate cuts by the Federal Reserve. “bitcoin and other risk assets are currently feeling the pressure of a stagflationary environment, geopolitical tensions and seasonal variations in liquidity.” commented Ted from TalkingMacro.
Initially, up to seven rate cuts were anticipated by the end of 2024, a sentiment that has changed dramatically now that the market is pricing in only one possible cut by December 2024. This change comes amid an environment in which data from Inflation are trending upward, challenging the Federal Reserve's position and potentially leading to a more cautious approach by Jerome Powell, the chairman of the Federal Reserve.
“For the first time in recent memory, the market is calling the Fed's bluff, quickly advancing the idea that the Fed may not make any cuts in 2024,” Ted noted.
#2 bitcoin Cyclical Correction Phase
After an exceptional rally since the beginning of the year, the market is going through a natural correction phase. Before the price drop, Charles Edwards, founder of Capriole Investments, noted: “We are one day away from breaking the record set in 2011 for days without a significant drop (-25%)”, emphasizing the extraordinary nature of the recent performance of bitcoin. .
Scott Melker, known as “The Wolf of Every Street,” highlighted technical indicators that suggested an imminent correction. “I broke and retested the range lows as resistance. (…) My biggest concern, which I have been discussing for months (was) that the RSI never reached oversold. We're almost there, all the lower time periods are oversold. This is still ONLY a 23% correction, very shallow for a bull market and consistent with other corrections in this streak. We have yet to see a 30-40% pullback during this bull market, like those of the past.”
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twitter.com/search?q=%24BTC&src=ctag&ref_src=twsrc%5Etfw” rel=”nofollow”>$btc Daily
It broke and retested the range lows as resistance. Nothing but air until around $52,000 on the chart.
My biggest concern, which I have been talking about for months (in the newsletter), is that the RSI never reached oversold.
We're almost there, all the lower time periods are oversold.
This… pic.twitter.com/5YZTWipBo8
– The wolf of all the streets (@scottmelker) twitter.com/scottmelker/status/1785596055125434827?ref_src=twsrc%5Etfw” rel=”nofollow”>May 1, 2024
#3 Profit taking
Traditional financial markets and savvy investors are taking advantage of the opportunity to make profits after substantial gains. “TradFi/Boomers are making profits: CME open interest is decreasing rapidly, April 29 135.6 thousand coins, April 30 123.9 thousand coins, surpassed around 170.4 thousand coins (March 20) “explained cryptanalyst RunnerXBT.
This trend confirms a broader profit-taking strategy following major events such as ETF approval and anticipation around the bitcoin halving. “That (…) confirms my thesis that a lot of these guys were looking forward to October 2023 because of the ETF approval and the btc halving, the trade developed and they are now making profits (yes, they are still up a lot) , because they did not crave btc. “dead altcoins.”
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TradFi/Boomers are making profits
CME Open Interest Is Declining Rapidly
April 29 135.6k coins
April 30 123.9k coins
It exceeded 170.4 thousand coins (March 20)
That, at least for me, confirms my thesis that a lot of these guys were looking forward to October 2023 because of the ETF approval… pic.twitter.com/M8KY1NfCtK
– RunnerXBT (@RunnerXBT) twitter.com/RunnerXBT/status/1785603337276055775?ref_src=twsrc%5Etfw” rel=”nofollow”>May 1, 2024
#4 US ETF flows and disappointment in Hong Kong
The dynamics surrounding bitcoin spot ETFs have shown significant tensions, as evidenced by recent activities in the US and Hong Kong markets. In the United States, bitcoin exchange-traded funds (ETFs) faced significant capital outflows, signaling a cooling in investor sentiment.
According to recent twitter.com/WhalePanda/status/1785534412383224038″ target=”_blank” rel=”nofollow”>data, total outflows from US spot bitcoin ETFs amounted to $161.6 million. Notably, Grayscale bitcoin Trust (GBTC) saw outflows of $93.2 million, while Fidelity and Bitwise saw outflows of $35.3 million and $34.3 million, respectively. BlackRock once again had zero net flows. These figures suggest a retreat in institutional interest, which has traditionally been a bulwark against price volatility.
Parallel to the United States, the debut of bitcoin ETFs in Hong Kong also failed significantly below expectations. Six recently launched ETFs, aimed at capturing the bitcoin and ethereum markets, collectively reached just $11 million in trading volume, far below the expected $100 million. bitcoin spot ETFs accounted for $8.5 million in trading volume. This was notably lower than the launch day volumes of US-based spot bitcoin ETFs, which had reached $655 million on their first day.
#5 Long Clearances
The market has also been hit by significant long liquidations, with a total of $451.28 million liquidated in the last 24 hours alone. The largest single liquidation was an eth-USDT-SWAP on OKX valued at $6.07 million, but bitcoin-specific liquidations were also significant, totaling $143.04 million, according to data from CoinGlass. These liquidations have amplified selling pressure on bitcoin.
At the time of publication, btc was trading at $57,715.
Featured image from iStock, chart from TradingView.com
Disclaimer: The article is provided for educational purposes only. It does not represent NewsBTC's views on whether to buy, sell or hold investments, and investing naturally carries risks. It is recommended that you conduct your own research before making any investment decisions. Use the information provided on this website at your own risk.
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