Bitcoin faces second day of decline as treasury yields and dollar strength impact cryptocurrency market

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3rd April 2024 – (New York) Bitcoin, the leading cryptocurrency, experienced a drop of over 4.76% on Tuesday, reaching a value of $66,134.00. This decline marked its second consecutive day of losses, totalling 7% over the two-day period, according to Coin Metrics. At its lowest point, Bitcoin fell to $64,572.00.

The decline began on Monday morning when Bitcoin was trading at around $70,000. The release of data indicating growth in the manufacturing sector for the first time since September 2022, coupled with a decrease in investor bets on rate cuts in June, contributed to the cryptocurrency’s downturn. Bitcoin has now fallen approximately 11% from its all-time high, reached on March 14.

Ether, another prominent cryptocurrency, also experienced a decline, losing 5.6% and trading at $3,240.27.

Simultaneously, the 10-year U.S. Treasury yield reached its highest level of the year, while the U.S. dollar, which typically has an inverse relationship with Bitcoin, reached a five-month high.

Joel Kruger, a market strategist at LMAX Group, stated, “Bitcoin doesn’t need much excuse to go through a period of correction after such an explosive performance in Q1.” He added, “U.S. economic data has been stronger of late, all while inflation continues to be a concern. This has resulted in a repricing of Fed expectations, translating to broad-based U.S. dollar demand on the more attractive U.S. dollar yield differentials.”

The decline in Bitcoin may have been further influenced by a significant transfer of over 4,000 bitcoins to the Bitfinex exchange by a large bitcoin holder, commonly referred to as a “whale.” CryptoQuant data revealed a surge in reserves on the exchange, typically indicative of increased selling activity, coinciding with the sudden drop in Bitcoin’s price.

Stocks associated with the performance of Bitcoin were also affected, but managed to recover slightly by the end of the day. Crypto exchange Coinbase saw a 2% decrease, while software provider MicroStrategy, often considered a proxy for Bitcoin’s price, experienced a 3% loss. The largest mining stocks, Marathon Digital and Riot Platforms, faced declines of 8% and 7% respectively. CleanSpark, one of the top-performing miners this year, slid 9%.

April is anticipated to be a tumultuous month for cryptocurrencies and related stocks, particularly mining stocks. Investors are focusing on the upcoming Bitcoin halving event, which will reduce the reward and revenue for Bitcoin miners in the second half of the month. While this event might negatively impact miners’ performance, historically, it has set the stage for Bitcoin rallies of 300% or more in the following months.