Bitcoin continues its downward spiral, posting its worst monthly performance since late 2022. This three-day decline occurred at a time when investors were nervously awaiting the FED’s interest rate decision and withdrew their funds from the cryptocurrency market in a defensive maneuver. Meanwhile, a worried analysis for altcoins attracted attention. Here are the details…
Bitcoin is experiencing a flash decline
April saw a brutal 16% decline for Bitcoin, erasing the gains of the previous rally that had pushed prices above $73,000. As of today, Bitcoin remains perilously below $57,000, its lowest point since late February, signaling a solid entry into bear market territory. Despite the recent carnage, Bitcoin remains up 28% year-to-date, driven by a surge in new exchange-traded funds (ETFs) launched in January. But this positive note cannot mask the current tremors that are shaking investor confidence.
Analysts offer conflicting interpretations of Bitcoin’s current state. Mags, a popular crypto commentator, suggests that $57,000 could be a crucial support level. He foresees a bullish scenario in which Bitcoin will briefly fall below this mark, triggering a rapid recovery before the week closes; it’s a deceptive move he calls “fraud.”
Michael van de Poppe expects short-term correction
Another crypto analyst, Michaël van de Poppe, expects a price correction approaching the conclusion, although there is a possibility of further short-term declines. Plan B, a leading figure in the crypto world, takes a historical approach and emphasizes that Bitcoin’s April closing price is the last “blue dot” month of the current cycle.
Interestingly, Plan B highlights an average price of $34,000 during the 2020-2024 halving cycle, closely aligned with the $55,000 prediction made by the Stock-to-Flow (S2F) model in 2019. Looking ahead, Plan B predicts that May will be the starting month of the “first red dot,” signifying the countdown to the next halving cycle. The S2F model, known for its bullish predictions, predicts a significant price increase to around $500,000 by 2024-2028.
What affected the price for Bitcoin and altcoins?
This latest decline can be attributed to two key factors. First, investors who entered the market during declines in 2022 and 2023, as well as investors who have seen significant increases in ETFs since early 2024, will profit. Second, a broader economic concern: the Fed’s monetary policy stance. Although a sudden interest rate increase is not expected, there is growing belief among investors that the Fed may postpone interest rate cuts throughout the year. This could negatively impact interest-sensitive assets such as cryptocurrencies, emerging market stocks and bonds.
This sentiment is reflected in record outflows from major Bitcoin ETFs this week, totaling a staggering $496 million. Additionally, data shows a slowdown in inflows into BlackRock’s iShares Bitcoin Trust, one of the leading ETFs. Despite last month’s highly anticipated Bitcoin halving, which typically drives up the price by reducing new coin creation, Bitcoin has lost nearly 15% of its value since April 20. This decline highlights the speculative nature of the cryptocurrency market, where short-term buying frenzy in anticipation of events can be quickly followed by selling.
Is there a bloodbath on the horizon for altcoins?
The contagion spread beyond Bitcoin and the broader cryptocurrency market experienced a brutal correction. Bitcoin ETFs suffered a staggering $162 million bleed just one day before the upcoming FOMC meeting. Additionally, higher-than-expected inflationary pressures could destroy any remaining hopes of a Fed rate cut in 2024. In the last 24 hours alone, Bitcoin lost 5% of its value and fell below the critical $ 60,000 level. But altcoins are facing an even steeper decline.
Crypto analyst Benjamin Cowen suggests a potential correlation between altcoin-Bitcoin (ALT/BTC) pairs and upcoming rate cuts. It draws parallels with past cycles where ALT/BTC pairs witnessed capitulation just before interest rate cuts. Cowen warns of a potential 40% drop in ALT/BTC in the coming months if history repeats itself.
Additionally, market analyst Patric H. predicts a tough May for both Bitcoin and altcoins. He predicts a period of final shakeout in the next 2-6 weeks, potentially leading to an exit. Patric highlights the current sentiment bordering on enthusiasm, which is evident in the “Greedy” zone of the Fear and Greed Index. It also highlights declining investor enthusiasm, mirroring the 2019 scenario
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