Bitcoin price continued its downward trend on April 17 as the market eagerly awaited the upcoming Bitcoin halving event, which is scheduled to take place on April 20. Data from Cointelegraph Markets Pro and TradingView showed that Bitcoin (BTC) dropped as much as 7.5% to an intra-day low of $59,648 from an opening of $63,814 on April 17.
The correction in Bitcoin’s price can be attributed to various factors, including the escalating geopolitical conflict in the Middle East, stagnating demand for spot Bitcoin exchange-traded funds (ETFs), a strengthening U.S. Dollar Index (DXY), and a weakening technical setup.
One of the reasons for the price drop is the slowing flows into U.S. spot Bitcoin ETFs, which has added to the selling pressure. Data from Farside Investors shows that the ETFs experienced net outflows of $58 million on April 16. This outflow has been driven by the Grayscale Bitcoin Trust (GBTC) and ARK 21Shares Bitcoin ETF (ARKB), which saw outflows of $79.4 million and $12.9 million respectively.
Most ETF issuers recorded zero flows over the last few days, raising questions among market participants. Bloomberg ETF analyst James Seyffart explained that this is not a cause for concern as it is typical for most ETFs. He clarified 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. Minor mismatches are handled by market makers who trade shares like stocks.
The U.S. Dollar Index (DXY) has also played a role in Bitcoin’s price correction. It rose 2.56% from its April 10 low of 103.52 to a six-month high of 106.169 on April 16, recording its best five-day run in 14 months. This strengthening of the dollar is attributed to expectations of sustained higher interest rates, which encourage foreign investors to seek greater returns on bonds and term deposits.
From a technical perspective, the U.S. Dollar Index is on track to rise further towards its November 2023 high at $106.757.
In terms of Bitcoin’s price action, traders are closely monitoring crucial levels. Independent trader Ali pointed out that the $62,000 level was a crucial support level for Bitcoin based on the UTXO realized price distribution (URPD). However, BTC has lost this support and it has now become a strong resistance level for bulls.
According to IntoTheBlock’s In/Out of the Money Around Price (IOMAP) model, there are over 1.15 million addresses that previously bought approximately 630,110 BTC in the price range of $62,858 to $64,670. This suggests that there is strong resistance in Bitcoin’s recovery path compared to the support it had on the downside.
It is important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research and exercise caution when making investment decisions.