Bitcoin (BTC) experienced a significant decline of 6% on April 19, dropping to a low of $59,640 before quickly recovering and finding support above $64,500. The rebound in price was driven by the anticipation of the upcoming Bitcoin halving, scheduled for April 20. This event typically generates considerable interest from traditional media and exchange-traded fund (ETF) providers, which helped counteract the negative impacts of broader socio-economic challenges.
The geopolitical landscape also contributed to the market’s volatility, with Bitcoin’s price movement appearing to correlate with global events. However, reassurances from Iranian officials stating that there were no plans for retaliation eased market concerns and aided in the recovery.
Despite the significant price swing, liquidations in BTC futures remained relatively low, totaling around $45 million. This suggests that market participants were not heavily leveraged, which is a positive signal considering that the $60,000 level has become a significant psychological support.
Cryptocurrency analysts at Amina Bank emphasized that geopolitical tensions are not the sole drivers of market sentiment. They highlighted that trading volumes, ETF flows, and news related to US inflation data also play a pivotal role. The analysts also pointed out that miners are selling off their Bitcoin in anticipation of the halving to secure profits before the reward reduction.
From an economic perspective, the resilience in US inflation data and strength in the labor market, which supported a 0.7% year-over-year growth in retail sales, have reduced the likelihood of the US Federal Reserve reducing interest rates in the next few months. This skepticism is reflected in the 5% decline of the S&P 500 index since it reached its all-time high on March 28.
When examining BTC derivatives markets, there is no significant increase in demand for leverage due to the Bitcoin halving event. The current open interest in BTC futures stands at $29.8 billion, only slightly higher than the $28.6 billion two days prior. This suggests that the halving has not sparked a significant surge in demand.
Analyzing the BTC futures premium, which typically trades at a 5%-10% annualized premium compared to spot markets, it is currently at 11%. This indicates a moderately bullish sentiment but represents a decrease from the previous week’s 16%. Even during the retest of the $60,000 level on April 19, the premium remained strong at 9%. This data suggests that while the market is cautiously optimistic, there is no rush of short-term speculative betting in anticipation of the halving event.
It is important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research and analysis before making any investment or trading decisions.