Cryptocurrency Market and US Stock Market Continue to Decline
On Tuesday, both the cryptocurrency market and the US stock market experienced a downward trend. By the end of the day, the S&P 500 Index, the Dow Jones Industrial Average (Dow), and the Nasdaq Composite Index all saw significant losses, with the Dow falling nearly 400 points, marking the worst quarterly start since 2020.
The rise in borrowing costs has weakened the stock market’s upward momentum, putting pressure on the S&P 500 Index. The 10-year and 30-year US Treasury bond yields reached their highest levels since early November.
Bitcoin briefly fell below $65,000 on Tuesday, hitting a daily low of $64,591.50. By the end of the US stock market session, the price had slightly recovered above $65,000. In the past 24 hours, the entire cryptocurrency market has fallen by 3.9%. Among the mainstream coins, Bitcoin (-5.68%), Ethereum (-6.43%), and Dogecoin (-10.33%) led the decline.
Meme coins plummeted by approximately 17% in the past 24 hours.
The US government transferred nearly $2 billion worth of Bitcoin to Coinbase, sparking concerns of selling pressure.
Market participants have been closely monitoring the US government’s Bitcoin address transfers, as any selling action could potentially affect the price of cryptocurrencies. Typically, an increase in the amount of Bitcoin flowing into exchange wallets increases the selling pressure on assets and triggers a decline in asset prices.
Data from Arkham Intelligence shows that on April 2, 2024, the US government executed a Bitcoin transfer involving nearly $2 billion, sending the tokens in several transactions to Coinbase Prime addresses. The transfer amount was 30,174.70 BTC, successfully processed at block height 837,413.
In recent years, the US Department of Justice has accumulated a large amount of BTC through the seizure of assets related to Silk Road, the Bitfinex hack, and the James Zhong case. The last confirmed sale was in March 2023 when the government sold approximately 50,000 Bitcoins related to the Silk Road website confiscated at the end of 2022 for $216 million, at a price of 9,861 Bitcoins.
As of April 2, 1:10 PM Eastern Time, the US government still holds 215,246 BTC (worth $14 billion) and 50,147 ETH (worth $163 million).
Bitcoin had already experienced a significant decline on the day, and after the news of the transfer, it further dropped below $65,000 before slightly rebounding.
Cryptocurrency analyst and commentator Phyrex commented on the X platform, “This sale of Bitcoin transferred to exchanges is said to have already been executed, and now it’s about the delivery, depending on the price of the delivery and the choices of new holders.”
Impact of Federal Reserve Rate Cut Expectations
Analysts have stated that the changing expectations surrounding the pace of Federal Reserve rate cuts have made traders uneasy. According to data from CME Group, federal funds futures indicate a 40% chance that the Federal Reserve will maintain interest rates at their current level before June.
Yesterday, US manufacturing data exceeded expectations. However, a Federal Reserve official stated that three rate cuts in 2024 still seem reasonable.
Loretta Mester, President of the Federal Reserve Bank of Cleveland, stated on Tuesday that she continues to expect three rate cuts this year, as part of the quarterly economic forecast submitted at last month’s Federal Reserve meeting, making Mester a slight majority among the 10 officials who expect at least three rate cuts this year. According to the most likely economic forecast, nine officials believe that two or fewer rate cuts may be appropriate.
Mary Daly, President of the Federal Reserve Bank of San Francisco, stated in a speech that three rate cuts this year are a reasonable baseline scenario and that three rate cuts are a forecast, not a commitment.
Bitcoin Price Must Maintain $65,000
Cryptocurrency analyst Rekt Capital stated in an article on April 2 that Bitcoin failed to complete a retest after the breakthrough, and as the Bitcoin halving approaches, the price trend will continue to slow down.
Rekt stated, “Bitcoin failed to complete a retest after the breakthrough. Technically, Bitcoin could still recover above its historical high of around $69,000 before the new weekly candle closes.” The analyst added that the Bitcoin price needs to stay above the weekly low point of $65,600 to avoid further losses.
According to data from Coinglass, if the Bitcoin price falls below the key level of $65,000, all long leveraged positions worth over $249 million across exchanges will be liquidated.
Technical analyst Lockridge Okoth stated that if the Bitcoin price falls below the support level of the 200-day Exponential Moving Average (EMA) at $65,556 (which has been crucial since October), the decline could extend to the level of $60,800.
On the other hand, if the 200-day moving average remains supportive, the Bitcoin price will rebound. Breaking through the support level at $69,000 will indicate more buy orders, increasing the likelihood of further gains, with the first target being the peak of $73,777, followed by the possibility of setting new highs above the $74,000 range.
Andrey Stoychev, Head of Institutional Business at Nexo, stated that the Bitcoin price correction is mainly attributed to new users entering the Bitcoin market in the two months since the approval of the US spot ETF. Stoychev expects a short-term adjustment in Bitcoin as new entrants want to invest in it.
He said, “The Bitcoin bull market has brought returns, with three out of the four cycles surpassing previous highs. Looking back at 2020, Bitcoin surged 250% within just four months after breaking its all-time high, indicating that if history repeats itself in this cycle, Bitcoin’s potential trajectory will reach $231,000.”
