Bitcoin, the largest cryptocurrency, is facing a significant decrease in its market value after a seven-month streak of growth. At the time of writing, Bitcoin has experienced an 11% drop, marking its first decline since August 2023 and bringing its trading price down to $63,200.
There are several factors contributing to this price drop. One major factor is the reduced demand for U.S.-based spot Bitcoin exchange-traded funds (ETFs) and the Federal Reserve’s indication that it is unlikely to lower interest rates. Additionally, the broader financial markets have been moving away from risky assets, which has also impacted Bitcoin’s bullish trend this month.
Despite these challenges, the market value of stablecoins like USDT and USDC continues to rise, offering some support to the overall market.
Analysts are closely monitoring the U.S. Treasury’s Quarterly Refunding Announcement, which is scheduled for May 1. It is believed that an increase in short-term U.S. bonds could inject liquidity into the market and potentially boost assets like Bitcoin. The announcement also suggests that the Treasury plans to borrow more during the April-June quarter, which could increase bond supply and yields, influencing investors’ risk appetite.
Despite the recent price drop, Bitcoin’s dominance in the cryptocurrency market has reached its highest level in three years, currently standing at 57%. This breakout from a six-month consolidation pattern indicates that Bitcoin may outperform alternative cryptocurrencies in the coming months.
A recent client report by Fairlead Strategies, published on April 29, supports this trend, noting that the increase in Bitcoin’s dominance suggests a preference for the largest cryptocurrency over altcoins in the medium term. The report also highlights the downward trajectory for most altcoins based on the weekly Relative Rotation Graph (RRG). Fairlead Strategies concludes that Bitcoin’s dominance breakout signals a continuation of its long-term recovery phase, with altcoins potentially losing the gains they made since early 2021.
It is important to note that the information presented in this article should not be considered investment advice. Cryptocurrencies are highly volatile and carry significant risks, so investors should conduct their own research and exercise caution.
