Bitcoin, the largest cryptocurrency, is experiencing a significant drop in price, marking the end of a seven-month upward trend. The current decline, the first since August 2023, has brought Bitcoin’s trading price to $63,200.
Several factors have contributed to the drop in Bitcoin’s price. One major factor is the decreased demand for U.S.-based spot Bitcoin exchange-traded funds (ETFs), coupled with the Federal Reserve’s reduced likelihood of lowering interest rates. Additionally, a shift away from risk in broader financial markets has played a role in reducing the bullish trend for Bitcoin this month.
Despite these challenges, the market value of leading stablecoins like USDT and USDC has continued to increase, providing some support to the overall market.
Analysts are closely monitoring the U.S. Treasury’s Quarterly Refunding Announcement on May 1. It is believed that issuing more short-term U.S. bonds could inject liquidity into the market, potentially boosting risky assets like Bitcoin. The announcement also suggests that the Treasury plans to borrow more during the April-June quarter, which could increase bond supply and yields, affecting investors’ perception of riskier assets.
Despite the recent price drop, Bitcoin’s dominance in the cryptocurrency market has risen to 57%, the highest level in three years. This breakout from a six-month consolidation pattern indicates that Bitcoin may outperform altcoins in the coming months.
In its latest client report, Fairlead Strategies noted that the increase in Bitcoin’s dominance suggests a preference for the largest cryptocurrency over altcoins in the medium term. This trend is supported by the weekly Relative Rotation Graph (RRG), which indicates a downward trajectory for most altcoins. Fairlead Strategies also added that the breakout in Bitcoin’s dominance signals a continuation of a long-term recovery phase, with altcoins losing most of the gains made since early 2021.
Disclaimer: This article does not constitute investment advice. Investors should be aware of the high volatility and risk associated with cryptocurrencies and should conduct their own research.
