Bitcoin (BTC) experienced a significant 6% decline on April 19, dropping to a low of $59,640 before quickly bouncing back and finding support above $64,500.
This rebound can be attributed to the optimism surrounding the upcoming Bitcoin halving, which is scheduled for April 20. The halving typically generates a lot of interest from traditional media and spot Bitcoin exchange-traded fund (ETF) providers. It seems that this event has helped counteract the negative effects of broader socio-economic challenges.
The geopolitical landscape also contributes to the market’s volatility, with Bitcoin’s price movement seemingly correlated with global events. However, reassurances from Iranian officials that there are no plans for retaliation have calmed the markets and aided in the recovery.
Despite the intense volatility on April 19, 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 believe that geopolitical tensions are not the only factors influencing market sentiment. They note that trading volumes, ETF flows, and news related to US inflation data are also crucial. The analysts also point out that miners are selling off their Bitcoin in anticipation of the halving, aiming to secure profits before the reward reduction.
From an economic perspective, the resilience in US inflation data and strength in the labor market, which has supported a 0.7% year-over-year growth in retail sales, has reduced the likelihood of the US Federal Reserve lowering interest rates in the coming 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 analyzing BTC derivatives markets, it is evident that the Bitcoin halving has not led to a significant surge in demand for leverage. The current open interest for BTC futures stands at $29.8 billion, only slightly higher than the $28.6 billion two days prior. Looking at a larger time frame, the demand for BTC futures appears subdued compared to the previous week’s $35.5 billion, indicating that the halving expectation has not caused excessive demand.
To understand professional traders’ positions after the price swing, it is important to look at the BTC futures premium. This metric typically trades at a 5%-10% annualized premium compared to spot markets, indicating that sellers require additional money to postpone settlement. Currently, the premium for 3-month BTC futures stands at 11%, which is moderately bullish but lower than last week’s 16%. Even during the rapid 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’s important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research before making any investment or trading decisions.