2024-04-18
Bitcoin's price suffered a significant blow as it diped below the crucial support level of $60,000.
This decline came at a time when the market was eagerly anticipating the upcoming Bitcoin halving event, scheduled for April 20.
On April 17, Bitcoin's price fell from an opening of $63,814 to a low of $59,648, marking a 7.5% drop. Several factors contributed to this downward trend, including geopolitical conflicts in the Middle East, stagnant demand for spot Bitcoin exchange-traded funds (ETFs), a strengthening U.S. Dollar Index (DXY), and a weakening technical setup.
The decline in price was further exacerbated by the outflows from U.S. spot Bitcoin ETFs.
On April 16, these ETFs saw a net outflow of $58 million, with significant outflows from the Grayscale Bitcoin Trust (GBTC) and ARK 21Shares Bitcoin ETF (ARKB), amounting to $79.4 million and $12.9 million, respectively.
The lack of inflows into most ETFs in recent days has raised concerns among market participants.
However, Bloomberg ETF analyst James Seyfartt reassured his followers that this is a normal occurrence, as the majority of ETFs often experience zero inflows on any given day.
Seyfartt explained that the creation and redemption of ETF shares depend on the supply and demand dynamics, and minor mismatches are handled by market makers.
Meanwhile, the U.S. Dollar Index (DXY) made significant gains, rising 2.56% from its April 10 low to a six-month high on April 16.
This increase was attributed to expectations of sustained higher interest rates, which attract foreign investors seeking greater returns on bonds and term deposits.
From a technical standpoint, the U.S. Dollar Index is projected to continue its upward trajectory, potentially reaching a high not seen since November 2023.
In terms of Bitcoin's price action, traders are closely monitoring key levels. Independent trader Ali highlighted the $62,000 level as a crucial support for Bitcoin, but the cryptocurrency has since lost this support, turning it into a strong resistance level.
According to IntoTheBlock's In/Out of the Money Around Price (IOMAP) model, Bitcoin faces significant resistance in its recovery path compared to the support it had on the downside. This suggests that the path of least resistance for Bitcoin's price is currently downward.
