Bitcoin price continued its downward trend on April 17 as the market eagerly awaited the upcoming Bitcoin halving event, set to occur on April 20. According to data from Cointelegraph Markets Pro and TradingView, Bitcoin fell from an opening of $63,814 on April 17, dropping as much as 7.5% to an intra-day low of $59,648.
The decline in Bitcoin’s price can be attributed to several factors, including the escalating geopolitical conflict in the Middle East. Additionally, the correction in Bitcoin’s price has been accelerated by stagnating demand for spot Bitcoin exchange-traded funds (ETFs), a strengthening U.S. Dollar Index (DXY), and a weakening technical setup.
The slowing flows into U.S. spot Bitcoin ETFs have added to the sell-side pressure on Bitcoin. Data from Farside Investors shows that these ETFs saw another day of net outflows, totaling $58 million, on April 16. This has been further exacerbated by outflows from the Grayscale Bitcoin Trust (GBTC) and ARK 21Shares Bitcoin ETF (ARKB), amounting to $79.4 million and $12.9 million respectively.
Most ETF issuers have recorded zero flows over the past few days, raising questions among market participants. Bloomberg ETF analyst James Seyffart explained that this is not a cause for concern and is typical for most ETFs. He highlighted that shares of an ETF are created and redeemed only when there is a significant mismatch in supply and demand and the cost to do so is lower than hedging.
The U.S. Dollar Index (DXY) has recorded its best five-day run in 14 months, rising by 2.56% from its April 10 low of 103.52 to a six-month high of 106.169 on April 16. This strengthening of the dollar is attributed to expectations of sustained higher interest rates. Higher interest rates typically attract foreign investors seeking greater returns on bonds and term deposits, thereby increasing the demand for the dollar.
From a technical perspective, the U.S. Dollar Index appears poised to rise further towards the November 2023 high at $106.757. In terms of Bitcoin’s price action, traders are closely monitoring crucial levels of support and resistance. The $62,000 level, which was previously seen as crucial support, has now turned into a strong resistance level for Bitcoin.
According to Glassnode’s UTXO realized price distribution (URPD), Bitcoin has lost this support and now faces stiff resistance in its recovery path. IntoTheBlock’s In/Out of the Money Around Price (IOMAP) model indicates that there are over 1.15 million addresses that previously bought around 630,110 BTC in the $62,858 to $64,670 price range.
It is important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research and assessment of risks before making any investment or trading decisions.