Bitcoin’s dominance in the digital assets market has reached its highest level in three years, currently standing at 55.3%. Despite recent sell-offs and market volatility, the cryptocurrency has shown resilience. The trading volumes for BTC Spot ETFs have remained robust, with a weekly trading volume of approximately $16.2 billion and an average daily volume of around $3.2 billion. The cumulative trading volume since inception is approximately $212 billion, with an average daily volume of roughly $3.3 billion. The market sentiment is cautious, with a net outflow of $85 million from Bitcoin Spot ETFs during the week.
Bitcoin ended the week at around $65,650, experiencing a 5.3% decline from the previous week’s closing value of around $69,350. The week saw notable volatility, particularly over the weekend, following a period of relative stability from Monday to Thursday. Bitcoin faced a downturn on Friday, dropping to a low of $65,100. The negative trend continued into Saturday, hitting a weekly low of approximately $60,650 before rebounding and concluding the week around $65,650. The weekend’s price drop was attributed to geopolitical tensions in the Middle East, but market sentiment improved after an announcement of a temporary halt in hostilities among the involved nations.
On the macroeconomic front, recent US inflation data has surpassed expectations, leading to a revision in market participants’ rate cut projections for 2024. Initially, expectations included a reduction of at least 75 basis points in interest rates. However, the latest data has shifted projections to anticipate 25/50 basis points cuts during the year, with the first cut expected in Q3 and a potential second cut towards year-end. The continued presence of inflation levels higher than central banks’ targets may result in a prolonged period of tighter monetary policy, impacting risk-on assets.
Digital asset investment products witnessed minor outflows amounting to $126 million in the past week. Bitcoin experienced outflows of $110 million but maintained positive inflows of $555 million month-to-date. Short-bitcoin, which had been witnessing outflows for the past three weeks, saw minor inflows of $1.7 million, likely capitalizing on the recent price weakening. The value proposition of Bitcoin strengthens as fiat currencies weaken, while stablecoins may lose value in line with fiat currency inflation. Investors are displaying caution and engaging in profit-taking following the strong uptrend witnessed in Q4 2023 and Q1 2024.
The upcoming halving of Bitcoin, scheduled for the night between April 19th and 20th, has drawn attention from market participants. Previous halving events have historically been followed by 9-12 months of upward trends, but they have also triggered short-term “sell the news” reactions before and after the event. Despite short-term bearish sentiment and market volatility, Bitcoin has maintained its dominance metric and robust trading volumes. The presence of inflation levels higher than central banks’ targets might lead to a prolonged period of tighter monetary policy, impacting investors’ portfolio realignment and mid-term expectations based on the latest financial indicators.
