The crypto market recently experienced a sharp decline on April 12, resulting in significant liquidations for traders. Bitcoin, along with major altcoins such as Ethereum and Solana, recorded notable losses in a short period of time. This sudden price dip led to 277,843 traders losing their leverage positions, with total liquidations amounting to a staggering $877.21 million within a span of 24 hours.
While the exact cause of this market downturn remains unclear, speculations point towards factors such as a recent correction in the US stock markets. The correlation between Bitcoin’s price decline and a dip in the S&P 500 index adds complexity to the situation, hinting at potential external influences impacting the crypto space.
The synchronicity between Bitcoin’s price movement and the US stock market’s fluctuations raises concerns about the broader economic landscape. The recent increase in the inflation rate to 3.5% year over year in March suggests that the US Federal Reserve (Fed) may refrain from implementing rate cuts in the near future. This shift in monetary policy could have implications for investors seeking higher yields in risky assets like BTC.
Historically, Fed rate cuts have encouraged investors to explore alternative investment options, contributing to the growth of the crypto market. The current scenario, where the Fed aims to lower inflation to its target of 2%, presents a bearish outlook for cryptocurrencies. The lack of monetary stimulus could dampen investor sentiment and limit the potential for significant price surges in the near term.
Despite the recent market turbulence, Bitcoin has displayed signs of resilience and growth in certain aspects. The increase in non-empty wallets on the network ahead of the upcoming Halving event on April 19 indicates a positive trend among investors. The rise in active BTC wallets by 370,000 over the last six days reflects a sustained interest in the digital asset leading up to a significant event in its supply schedule.
However, Bitcoin’s price performance in the short and medium term has been lackluster, with declines of 1.33% and 6.20% over the past seven and 30 days, respectively. While the current trading price of $66,882 and an uptick in daily trading volume signal some level of activity in the market, the overall sentiment towards BTC appears subdued given the prevailing economic uncertainties.
The recent volatility in the crypto market underscores the interconnectedness of digital assets with traditional financial markets. External factors such as inflation data and monetary policy decisions can exert considerable influence on the price dynamics of cryptocurrencies. As market participants navigate through uncertain times, conducting thorough research and staying informed about economic developments are crucial for making informed investment decisions.