bitcoin falling-themetaeconomist

Bitcoin loses 5%, but it's not a disaster

2 April 2024

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Bitcoin loses 5% in a few minutes during the Asian Session. The other top cryptocurrencies by market capitalization do even worse. Ethereum just over 7%, BNB less than 6% and Solana the same. Certainly not a situation of great collapse and great panic, although the decline was vertical. Bitcoin fell below $66,500, which very far from the disaster that many are talking about on social media. "Bitcoin (BTC) faced selling pressure during Asian trading hours on Tuesday as upbeat U.S. factory data lifted the dollar index (DXY) to the highest since mid-November" - Coin desk says.

The "recovery" of the dollar

The dollar is stronger, so-so Asian markets and that's probably why Bitcoin pays the bill. But, all things considered, Bitcoin is not performing badly even for risk assets and we have to see this movements as a temporary correction that does not change the fundamentals. The Asian markets, which may be responsible for this moment of difficulty for Bitcoin, are actually ending the day on a positive note. Hong Kong makes +2.35%. The dollar index, which tracks the greenback’s value against major fiat currencies, topped the 105 mark for the first time over four months, taking the four-week gain to 2.58%. 

Macro data has provided further support for rate cuts in the USA which will perhaps be postponed even beyond June. Markets now price the chance that the Federal Reserve will cut rates in June at just over 50%. Something that only 1 week ago was priced at over 60%, just to have a perspective of what is happening also in terms of sentiment. Although cryptocurrency enthusiasts are often excessively reactive to movements, it should be remembered that Bitcoin is a mere -10% from historical highs, just as the daily losses of the entire sector should be assessed with a bit of a sense of proportion.

SOURCE: CoinDesk

PHOTO CREDITS: Art Rachen

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