Bitcoin, the largest cryptocurrency, is set to end its seven-month upward trend with an 11% drop in price. This marks the first decline since August 2023, bringing Bitcoin’s trading price to $63,200.
Several factors have contributed to the recent price drop of Bitcoin. One significant factor is the reduced demand for U.S.-based spot Bitcoin exchange-traded funds (ETFs) and the Federal Reserve’s reluctance to lower interest rates. Additionally, a shift away from risk in broader financial markets has also dampened the bullish trend for Bitcoin this month.
Despite these challenges, the market value of leading stablecoins like USDT and USDC has provided some support to the overall market.
Analysts are closely monitoring the U.S. Treasury’s Quarterly Refunding Announcement on May 1. It is believed that issuing more short-term U.S. bonds could inject liquidity into the market, potentially boosting assets like Bitcoin. The announcement also suggests that the Treasury plans to borrow more in the April-June quarter, which could increase bond supply and yields, impacting investors’ perception of riskier assets.
Although Bitcoin has experienced a price drop, its dominance in the cryptocurrency market has risen to 57%, the highest level in three years. This breakout from a six-month consolidation pattern indicates that Bitcoin may outperform altcoins in the coming months.
According to Fairlead Strategies’ latest client report, the increase in Bitcoin’s dominance suggests a preference for the largest cryptocurrency over altcoins in the medium term. This trend is supported by the weekly Relative Rotation Graph (RRG), which indicates a downward trajectory for most altcoins. Fairlead Strategies also notes that Bitcoin’s dominance breakout signals a continuation of a long-term recovery phase, with altcoins losing most of the gains they made since early 2021.
Disclaimer: This article does not provide investment advice. Investors should be aware of the high volatility and risks associated with cryptocurrencies and should conduct their own research.