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Bitcoin has fallen more than 16% in April, on track to be its worst month since November 2022.
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Ledn CIO said BTC could fall to the mid-to-low $50,000 range.
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Bloomberg Intelligence ETF analysts noted that the debut of Hong Kong's spot cryptocurrency ETF was not as bad as expected.
It may be time to call the cryptocurrency correction a bear market after a lackluster debut for a Hong Kong spot ETF on Tuesday and interest rate concerns gave traders plenty of reason to sell, sending Bitcoin (BTC) below $60,000.
BTC hit an afternoon low of $59,100, its lowest since late February, down more than 5% in the past 24 hours. Coindesk 20 Index (CD20) fell even further over the same period, dropping 6% while Ether (ETH) and Solana (SOL) suffered losses of 7%-8%.
Bitcoin is down about 20% from its all-time high of $73,000 hit in mid-March.
Traditional markets also struggled after a series of U.S. economic data released Tuesday morning cast a stagflationary tone, signaling slowing growth and accelerating upward pressures on prices, with the Nasdaq down 2% for the day and the S&P 500 down 1.6%.
Joel Krueger, market strategist at LMAX Group, noted in a report on Tuesday that recent reports of strong U.S. economic data and accelerating inflation have significantly reduced expectations of an interest rate cut from the Federal Reserve, which is weighing on the digital asset market.
“Despite investors calling for further monetary easing, we continue to see evidence that the Fed needs to re-elevate its longer-term policy outlook,” Krueger said. “The U.S. dollar is regaining popularity across the board, and this trend is spilling over into crypto assets.”
Worst month since FTX
Tuesday's drop marks BTC and the broader cryptocurrency market's worst monthly drop since November 2022, when cryptocurrency exchange FTX collapsed, snapping a seven-month winning streak.
With just a few hours to go (UTC time) at the end of the month, Bitcoin is down over 16% since the start of April, while Ethereum is down 18%. Smaller cryptocurrencies have suffered even deeper corrections, with altcoin favorites SOL, Dogecoin (DOGE), and Avalanche (AVAX) all down between 35% and 40% this month.
Overall, the cryptocurrency market capitalization fell by nearly 18%, marking its biggest drop since June 2022. TradingView Data show.
Bitcoin's decline may not be over yet
“We're expecting a selloff in the mid to low $50,000 range.” [for BTC]”This should be a buying opportunity,” said John Glover, chief investment officer at crypto lending firm Ledn.
K33 Research noted that seasonal effects from lower interest rates over the summer could also lead to lower prices.
“Traders who chose the strategy of buying BTC at the May open and exiting at the May open
“The September close would have represented a cumulative return of -29% over the past five years,” said K33 analyst Betul Lunde, “while traders who bought at the October open and sold at the April close would have experienced a massive return of 1,449%.”
Hong Kong ETF debut is (not so) disappointing
The opening day of a Hong Kong-listed Bitcoin and Ethereum spot ETF failed to wow commodity-focused market participants, with trading volumes just over $10 million.
But given that the Hong Kong ETF market is only a fraction of the size of the U.S. market, the debut was more successful than first impressions suggest, said Eric Balchunas, senior ETF analyst at Bloomberg Intelligence.
“When you look at the numbers regionally, this is huge,” Balchunas said.
China AMC's bitcoin product alone attracted more than $123 million in assets in its first trading session, making it the sixth-best ETF launch in the past three years and already in the top 20% of largest ETFs, he said. Quote Data from Bloomberg.
Balchunas added that the Hong Kong-listed ETF comes at an “opportunistic time” and could help offset outflows from U.S. commodities, which have recently slowed.
