Bitcoin Bounces Back Past $40,000, But May Struggle To Maintain Position
Bitcoin managed to recover from the $38K price zone and is now trading over the $40K mark, indicating that the bulls have made a rally against the bears.
Though the largest cryptocurrency in terms of market capitalization has lost 10% in the last two weeks, BTC is gradually recovering.
Bitcoin is currently trading at $41,431, according to price data website CoinGecko, after falling to roughly $38,779 on Monday.
Bitcoin increased about 7% from the current month’s lows. The majority of the token’s profits come from large traders amassing more crypto at lower prices.
Additionally, the token’s erratic movements resulted in significant liquidations in the futures market, particularly in long holdings.
Bitcoin Recovers – For Now
However, the massive liquidations revealed another factor affecting BTC positioning — a sizable fraction of traders looked to be abandoning the world’s largest cryptocurrency.
Along with Bitcoin’s rebound, the broader cryptocurrency market has increased by 3.3 percent during the last 24 hours.
Ethereum (ETH), the second-largest cryptocurrency by market capitalization, is currently trading at $3,097, following a Tuesday low of $2,897.
Crypto total market cap at $1.88 trillion on the daily chart | Source: TradingView.com
Based on data by CoinMarketCap, Bitcoin’s trading volume increased 19.60 percent in the last 24 hours, followed by a 1.04 percent decline in its market capitalization.
The volume/market cap ratio has increased to 0.02647, while market dominance has increased to 40.87 percent.
Marcus Sotiriou, an analyst at the UK-based digital asset trader GlobalBlock, stated in a newsletter:
“In my judgment, the macro landscape is favorable… I am unconcerned about whether or not there will be a 50-basis-point rate hike. What matters is the consumer’s strength.”
Breaching Above $40K A Challenge
Bitcoin may struggle to maintain a price above $40,000, after the US Dollar Currency Index (DXY) touched a 52-week high of 101.02 on Wednesday.
The dollar’s adverse relationship with Bitcoin has remained stable throughout the previous decade, according to experts at cryptocurrency research firm Delphi Digital in an April 14 analysis.
Data from blockchain analytics firm Kaiko shows that there was no bullish demand for BTC positions in perpetual futures markets.
The analytics firm reported in a tweet that funding rates for both Bitcoin (BTC) and Ethereum (ETH) had continued to drop since late-2021.
Meanwhile, crypto funds had their second consecutive week of withdrawals as Bitcoin grew more interest rate sensitive and investors adjusted to the Federal Reserve’s hawkish stance, CoinShares reported Wednesday.
According to CoinShares, crypto funds saw a net outflow of $97 million in the seven days ending April 15.
This is a significant change from the previous week, when the majority of the $134 million in outflows came from US funds.
The outflows of $134 million were the most since January.
Featured image from old.iranintl.com, chart from TradingView.com