The downturn in Bitcoin was an anticipated correction, also pressured by the rise in U.S. Treasury yields, and may also be related to the "Bitcoin whales"...
Affected by the rise in U.S. Treasury yields, Bitcoin fell for the second consecutive day at the start of the new month and quarter.
On Tuesday, the world's largest cryptocurrency once fell below $65,000 per coin for the first time since March 24, plummeting about $5,000 in the past 24 hours. Bitcoin has now fallen about 11% from its historical high set on March 14. Ethereum also fell, currently trading at around $3,315 per coin.
At the same time, the 10-year U.S. Treasury yield reached its highest level this year, and the dollar, which had an inverse relationship with Bitcoin prices, also reached its highest level in nearly five months. The strengthening of U.S. Treasury yields and the dollar is mainly due to the U.S. economic data released on Monday. The data showed that the manufacturing industry expanded for the first time since September 2022, leading investors to cool their bets on a rate cut by the Federal Reserve in June.
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Joel Kruger, a market strategist at LMAX Group, said: "After such a strong performance in the first quarter, Bitcoin doesn't need much of an excuse to enter a period of adjustment."
That being said, as U.S. economic data has recently performed strongly, and inflation remains a concern, leading the market to reprice the Federal Reserve's interest rate prospects, this has also boosted the more attractive interest rates of the dollar, which is unfavorable for Bitcoin.
The downturn in Bitcoin may also be exacerbated by the unusual behavior of a large Bitcoin holder (or "Bitcoin whale"), who transferred more than 4,000 Bitcoins to the Bitfinex exchange late on Monday night. Data from CryptoQuant shows that the exchange's reserves surged, which usually indicates an increase in selling activity, coinciding with the sudden drop in Bitcoin prices at the time.
Stocks linked to Bitcoin's performance were dragged down. Cryptocurrency exchange Coinbase fell by 4%, and the largest corporate holder of Bitcoin, MicroStrategy, fell by nearly 7%. Bitcoin mining giants Marathon Digital and Riot Platforms fell by 7% and 6%, respectively. CleanSpark, one of the best-performing Bitcoin miners this year, fell by 6%.
April may be a turbulent month for cryptocurrencies and related stocks (especially the stocks of Bitcoin mining companies). Investors are watching the Bitcoin halving event, which will significantly reduce the rewards for Bitcoin miners in the second half of this month, thereby reducing their income. This event may damage the performance of Bitcoin miners, but historically, Bitcoin has risen by 300% or more in the following months. So far in 2024, Bitcoin has still risen by 53%.
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