As regulatory and macroeconomic obstacles increase, the price of bitcoin declines

Written by Rock Buivy

Post Date: 1 Apr, 24

The price of bitcoin turned around at $71,000 as the confidence of experienced traders started to wane.

On March 27, the price of bitcoin experienced a mild decline to $68,430 after failing to break beyond the $71,000 barrier.

Professional traders’ positive mood has declined over the previous week, according to data from Bitcoin derivatives, which may mean that the $69,000 mark will not hold.

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The price of bitcoin will be determined by inflows into spot ETFs

In the five days preceding March 27, there was a rise from $63,800 to $70,000, but only $151 million worth of leveraged short bets were forced to close in the Bitcoin futures markets.

This implies that bears maintained their cautious stance despite the noteworthy $888 million net withdrawal from U.S. Bitcoin spot exchange-traded funds (ETFs) that occurred last week.

Positively, investors in spot ETFs have not panicked despite Bitcoin’s 17.6% decline from $73,757 on March 14 to $60,795 on March 20.

This shows that the cryptocurrency is resilient. But other market watchers contend that the unusually large inflows into spot ETFs were the main cause of BTC’s recent high, prior to the April Bitcoin halving.

This underscores the need of bulls keeping an eye on such occurrences.

The notable reversal in spot ETF flows this week, marked by a net inflow of $418 million on March 26, serves as encouraging news for Bitcoin enthusiasts.

Despite Bitcoin’s price hovering just 4% below its peak, the resilience in spot ETF flows wasn’t driven by reduced withdrawals from Grayscale’s GBTC.

This observation underscores the presence of genuine institutional demand in the market, a promising sign for Bitcoin’s continued growth and adoption.”

This does not, however, guarantee that $69,000 will act as a support level for experienced traders.

By examining aggregated holdings across spot, perpetual, and quarterly futures contracts, analysts can determine whether whales and arbitrage desks are taking a bullish or bearish approach.

Professional traders on Binance had a long-to-short ratio of 1.50 on March 22, which favoured long holdings. As of right now, the ratio has marginally dropped to 1.42.

On March 22, the long-to-short ratio on OKX was 3.22, indicating a considerably higher positive feeling. Since then, this sentiment has decreased, with the ratio now favouring longs at 1.49.

Even though prices rose by 9.5% during that time, there appears to have been a noticeable decline in optimism among top traders, indicating that other factors might be tamping down positive mood.

Bitcoin price is impacted by mixed market signals and global economic concerns

Certain observers contend that the worldwide economic recession is having an effect on Bitcoin’s performance, especially in light of the S&P 500 index’s inability to hold its record high of 5,320 reached on March 21.

Investor confidence is being undermined by the uncertainties surrounding the U.S. Federal Reserve’s interest rate plans for 2024; generally speaking, rate decreases are perceived favourably for riskier assets like Bitcoin.

At the Federal Reserve’s meeting on May 1, there is just an 8% likelihood of a rate drop, according to the CME FedWatch Tool, which represents fixed-income market expectations.

Moreover, experts advise against interpreting a Fed rate reduction as a sign of prosperity but rather of problems.

Co-founder of Bespoke Investment Group Paul Hickey expressed his worry that the stock market is most at risk from a lack of profits growth.

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He also emphasised concerns regarding the overemphasis on artificial intelligence, which has been a major driver of the recent increases in the stock market.

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