(Kitco News) – The downturn in the crypto market intensified on Tuesday as Bitcoin (BTC) briefly fell below $65,000 while the total cryptocurrency market cap has declined by $170 billion, which translates to a loss of 4.6%.
Stocks also fell under pressure as a spike in the DXY led to weakness across financial markets, except for gold, which hit a new record high above $2,277 per ounce. The prospect of an interest rate cut coming later than the market expects contributed to the weakness, while sticky inflation has some worried that the Fed’s next move might actually be a rate hike.
At the market close, the S&P, Dow, and Nasdaq all finished lower, down 0.72%, 1.0%, and 0.95%, respectively.
Data provided by TradingView shows that Bitcoin’s price declined roughly 7.5% from the open of the daily candle on Tuesday, hitting a low of $64,550 near midday before dip-buyers stepped in to push it back to support $66,000.
BTC/USD Chart by TradingView
At the time of writing, BTC trades at $65,900, a decline of 5.25% on the 24-hour chart.
Trading and rebalancing
"Trading fundamentals (vs) market positioning, that’s how I really view the current environment,” said Greg Magadini, Director of derivatives at Amberdata, in a note to Kitco Crypto. “Admittedly, I don’t have clear conviction this week, except for a potential ‘sell-the-news’ play.”
Based on the “fundamental picture for BTC,” Magadini suggested “there are really good reasons to be long,” including the halving, which will take place sometime between April 19 and 20, “ETF flows outperforming all previous ETFs and expectations,” and the fact that Bitcoin has already notched a new all-time high – along with “TradFi proxy gold as well.”
“That said, everyone seems positioned for this,” he noted. “I’m seeing an elevated futures basis… the cost of leveraged longs barely retraced before moving higher again today. The option market is pricing in the halving event as well.”
“Without a proper breakout through to new ATHs in BTC we’re unlikely to get a valuable payoff for long call volatility buyers, given the declining RV and growing VRP,” Magadini added. “That said, the current positioning being so extended is setting the market up for a VERY interesting ‘sell-the-news’ halving cycle play.”
“Until halving, I suspect the market favors longs but it’s still a hard call given the market is already so invested,” he concluded.
According to MN Trading founder Michaël van de Poppe, there is a high probability that the pre-halving peak is in for Bitcoin, and it is likely to consolidate lower before continuing higher after the halving.
Crucial area lost for #Bitcoin.
We'll not see a new ATH pre-halving unless $69K breaks.
What I do expect is a period of consolidation, through which altcoins will wake up after the end of this correction.
Area of interest for Bitcoin?
$56-60K. pic.twitter.com/CRIYtWSeY8— Michaël van de Poppe (@CryptoMichNL) April 2, 2024
And market analyst Rekt Capital said today’s move shows that “Bitcoin is still technically in the pre-halving retrace phase of its cycle (dark blue circle),” before noting that “this phase is all about setting up the next phase: the re-accumulation phase (red).”
“This recent rejection from $70k has given us a better idea where the re-accumulation range high resistance is (red horizontal),” he said. “Now it's all about figuring out where the re-accumulation range low will be (green horizontal).”
“For now, the -18% Pre-Halving Retrace has potentially marked the bottom of this re-accumulation range,” Rekt Capital concluded. “If ~$60,000 continues to be the bottom… BTC may consolidate between $60k and $70k for the coming weeks going into the halving and beyond.”
Altcoins slide deep into the red
The altcoin market got hammered in the wake of Bitcoin’s pullback, with all but 15 tokens in the top 200 recording losses on the day.
Daily cryptocurrency market performance. Source: Coin360
Ethena (ENA) bucked the downtrend to post a gain of 27.7%, followed by a gain of 8.4% for Litecoin (LTC), and an increase of 7.5% for Bitget Token (BGB). Reserve Rights (RSR) led the losers with a decline of 14.7%, while Ankr (ANKR) lost 14.3%, and Yield Guild Games (YGG) fell 14%.
The overall cryptocurrency market cap now stands at $2.49 trillion, and Bitcoin’s dominance rate is 52.2%.
