Bitcoin’s recent surge has encountered a setback as the cryptocurrency dipped below the $69,000 mark per coin today. Although it has rebounded to surpass $70,000, it remains shy of its peak at $73,700 achieved just yesterday.
This decline is ascribed to various factors, including apprehensions regarding escalating inflation and potential selling activities by Grayscale. Recent data from the Bureau of Labor Statistics, a branch of the Labor Department, revealed a 0.4% increase in consumer prices last month and a 3.2% surge compared to last year, surpassing initial forecasts. These figures have instigated concerns that the Federal Reserve might not execute the anticipated interest rate reduction in May, triggering a sell-off in both digital assets and stocks.
Moreover, Grayscale has been observed transferring a substantial volume of Bitcoin to its custodian, Coinbase, presumably for selling purposes. According to Arkham Intelligence data, approximately $400 million worth of Bitcoin was relocated to Coinbase today.
On chain technical analysis suggests that Bitcoin ETF purchases which will be executed later tonight should more than make up for this temporary dip.
The selling pressure from Grayscale primarily emanates from investors redeeming their holdings in its Bitcoin Trust ETF, which underwent conversion from a closed-end fund in January. Consequently, this has flooded the market with additional Bitcoin supply, thereby exerting downward pressure on prices. Despite these redemptions, other Bitcoin ETFs have witnessed record-high net inflows, suggesting sustained investor enthusiasm for the cryptocurrency.
The CoinDesk 20 index, a prominent benchmark reflecting the performance of the largest and most liquid digital assets, experienced a notable 6% decline. Recent data from CoinGlass underscores the magnitude of this downturn, revealing that within the past 12 hours, long positions totaling over $100 million were erased, while an additional $167 million worth of longs were liquidated over the preceding 24-hour period.
Perfect time to buy your Bitcoin before the rally continues
This downturn in digital assets mirrors broader market trends, as other traditional assets, such as gold, and indices like Wall Street’s tech-focused Nasdaq, have also faced considerable pressure throughout the week. These developments highlight a broader sentiment of risk aversion among investors, potentially influenced by concerns over inflation, monetary policy shifts, and geopolitical tensions.