The crypto market has gone through volatile trading lately, with the major cryptos including the Bitcoin price witnessing a sharp decline. Notably, the investors seemed to be trading cautiously amid the macroeconomic concerns while eagerly waiting for the key economic data releases this week before putting further bets into the digital asset space.
Meanwhile, as the market participants are looking for potential reasons behind the recent crypto market selloff and Bitcoin price dip, let’s look at some potential factors triggering the event.
Reasons Behind The Recent Bitcoin Price Dip
Although there could be a flurry of reasons that might be impacting the recent dip in the Bitcoin price, the market pundits have attributed some key factors behind it. Here we explore the potential factors that might have contributed to the recent decline in the Bitcoin price.
Recent DTCC Update Dampens Market Sentiment
A recent statement from the Depository Trust & Clearing Corporation (DTCC) has rattled investors, contributing to a downturn in the Bitcoin price today. Notably, the DTCC announced its decision not to allocate collateral to exchange-traded funds (ETFs) with exposure to Bitcoin or other cryptocurrencies, signaling a cautious stance towards digital assets.
Effective April 30, 2024, the DTCC will implement changes to collateral values for certain securities, potentially impacting position values within the Collateral Monitor. It’s worth noting that ETFs or similar investment instruments featuring cryptocurrencies as underlying assets will face a 100% haircut, exacerbating concerns among cryptocurrency investors.
Meanwhile, the DTCC’s move underscores the lingering regulatory uncertainty surrounding digital assets and highlights the challenges faced by institutional players in embracing cryptocurrencies. As investors grapple with the implications of DTCC’s decision, Bitcoin prices have experienced downward pressure, reflecting the broader market sentiment influenced by regulatory developments and institutional actions.
Rate Cut Concerns Amid Gloomy Economic Data
The crypto market experienced a downturn today as investors took a cautious stance ahead of key economic data releases. Concerns mounted following dismal figures from the Bureau of Economic Analysis, with first-quarter GDP growth falling short of expectations at 1.6%. This underperformance raised fears of inflationary pressures, exacerbated by an unexpected surge in the March PCE inflation surge to 2.7%, as compared to a 2.5% jump in the prior month.
Meanwhile, investors are now anxiously awaiting the Federal Open Market Committee’s (FOMC) decision on interest rates this week, seeking clarity on the Federal Reserve’s policy intentions. Notably, the possibility of a delay in rate cuts has contributed to market instability.
Considering that all eyes are on Federal Reserve Chair Jerome Powell’s subsequent press conference for insights into the central bank’s future policy trajectory amid the current economic uncertainty.
Also Read: Cardano Whales Dominate As ADA Surpasses Dogecoin & Litecoin Volume
Bitcoin Halving Volatility
The Bitcoin price experienced a notable dip, attributed to the expected post-halving volatility. Analysts, including Rekt Capital, noted that such fluctuations are common after a Bitcoin Halving event. This volatility, which impacts investor sentiment, is a key factor influencing the current market dynamics.
However, despite short-term concerns, market experts remain optimistic about the long-term outlook following the halving. They emphasize the potential for Bitcoin’s value to appreciate over time, driven by factors such as scarcity and increasing institutional adoption.
While fluctuations may continue in the near term, many investors maintain a bullish perspective on Bitcoin’s trajectory, underscoring confidence in its resilience and future growth potential.
Bitcoin ETF Outflow Sparks Concerns
Investor sentiment took a hit recently as the U.S. Spot Bitcoin ETF experienced continued outflows over the past week. Notably, the ETF recorded outflows for three consecutive days leading up to April 26.
Meanwhile, Farside Investors reported a combined Spot BTC ETF outflux of approximately $422 million during this period, raising concerns among investors. The significant outflow signals a potential waning interest from Wall Street players in the flagship cryptocurrency.
MicroStrategy Earnings Anticipation
Investors in the cryptocurrency market are eagerly waiting for MicroStrategy’s earnings report, set to be released today after the closing bell on Wall Street. This anticipation comes amid heightened interest in the company’s financial performance, particularly due to its significant holdings in Bitcoin.
MicroStrategy, led by co-founder Michael Saylor, has been vocal about its bullish stance on Bitcoin, which has garnered attention from both crypto enthusiasts and traditional investors. The outcome of MicroStrategy’s earnings announcement is expected to provide valuable insights into the company’s financial health and its continued investment strategy in Bitcoin.
Bottom line:
Amid the declining Bitcoin price, renowned crypto trader Peter Brandt has sparked concern among investors by suggesting that Bitcoin may have peaked after reaching an all-time high of over $73,000. Brandt warns of a potential downturn, with Bitcoin’s price possibly plummeting to the mid-$30s or lower.
Notably, he bases this projection on the concept of exponential decay, indicating a significant shift in sentiment within the crypto community. This outlook has contributed to the downward pressure on Bitcoin’s price today.
Meanwhile, as of writing, the Bitcoin price traded at $62,646.53, with its one-day trading volume soaring 23.28% to $21.83 billion. Notably, the crypto has touched a high of $63,935 and a low of $61955 in the last 24 hours, reflecting the highly volatile scenario in the market.
Also Read: 10 Catalysts Traders Are Watching as Bitcoin Price and Crypto Market Falls Lower
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
