Ahead of the April 20th halving, the value of Bitcoin is falling as the US dollar strengthens.
Major cryptocurrencies continued to decline on Wednesday, mainly due to macroeconomic factors and volatility around the upcoming Bitcoin halving on April 20th.
Bitcoin has fallen more than 1%, adding up to an 8.8% decline in seven days, while Ether has fallen between 2% and nearly 13% over the past week, and Dogecoin has fallen 3%. Global cryptocurrency market capitalization fell 0.9% over the past 24 hours to $2.39 trillion as of 10:30 a.m. ET, according to data from CoinGecko.
Michael Van de Poppe, cryptocurrency analyst, CEO and founder of consulting and education platform MNTrading, said in a message to The Defiant that Bitcoin fell below the first resistance level at $64,000 on Tuesday. He rejected the current level and said the price continued to fluctuate thereafter.
“After such a volatile event, volatility is likely to decline before another big impulse occurs,” Van de Poppe said.
Mr. Powell's comment
The S&P 500 was flat and the Nasdaq fell 0.1% after Federal Reserve Chairman Jerome Powell suggested interest rates may need to be kept high.
Meanwhile, the Dow Jones Industrial Average rose 63.86 points (0.17%) to $37,798.97, ending its losing streak on the 6th.
Market activity became volatile after Chairman Powell's remarks. “While recent statistics show solid growth and continued strength in the labor market, there has been no further progress towards returning to the 2% inflation target so far this year,” he said in a panel discussion. It also shows.”
Meanwhile, traders are also keeping an eye on developments in the Middle East after Iran fired missiles and drones at Israel on Saturday.
Strengthening the US dollar
The US dollar is currently rising on expectations that interest rates will continue to rise, hitting its highest five-day price since February 2023.
“Less than a month ago, markets were expecting the Fed to begin cutting rates in June. A longer-term rally is now the base case,” market research firm Kobeissi Letter wrote in X ( I wrote this in a Tuesday post on my old Twitter account.
A strong dollar is often a reaction to the U.S. Federal Reserve's policies, such as raising interest rates to fight inflation. Rising interest rates can increase yields on dollar-denominated financial assets, making them more attractive compared to riskier assets such as Bitcoin.
On April 16, Chairman Powell said the current inflation rate of 3.5% is not heading towards the central bank's 2% goal. Chairman Powell suggested that gaining his confidence is likely to take longer than expected.
The Bloomberg Dollar Spot Index (BBDXY), which measures the value of the U.S. dollar against a collection of 10 major world currencies, has risen about 2% over the past five trading sessions. For context, this spike represents the most significant increase the index has experienced in the past 14 months.
Bitcoin halving
Another major factor increasing volatility in the crypto market is Bitcoin's halving, which is just three days away on April 20th. This process reduces the amount of BTC that can be mined per block by 50%, impacting the crypto market.
As Bitcoin's dominance chart shows, despite the halving, investors are showing higher confidence in the crypto asset compared to the 2020 halving event. According to CoinGecko, three days before the 2020 halving, Bitcoin's dominance ratio was 15% higher than its current 51.6%.
According to CoinGlass data, a total of 60,820 prospective traders experienced liquidations worth $171.64 million in the past 24 hours.
The single largest liquidation occurred on the OKX cryptocurrency exchange, specifically the ETH-USD swap, with a value of $5.61 million.
The fear and greed index of the cryptocurrency market is currently “67”. greedy. This index provides insight into Bitcoin market sentiment condensed into a simple meter from 0 to 100. A value of 0 means “extreme fear” and 100 represents “extreme greed.”
Meanwhile, trader Justin Bennett seems unimpressed by the momentum of the expected Bitcoin halving.
“Very unpopular opinion: The next #Bitcoin halving could be hard sell news,” he said on X. Bennett added that the fact that Bitcoin retook the previous cycle's highs for the first time before another halving, plus “what's going on around the world, what bond yields have been doing lately, the U.S. dollar, U.S. housing starts falling off a cliff, inflation continuing, the stock market reversing – you get the idea.”
