Bitcoin (BTC) headed towards $40,000 on April 22, after a major pullback in the equity market capped the latest advance by the bulls.
Bitcoin loses USD 3,000 due to the fall of the US market
Data from Cointelegraph Markets Pro and TradingView showed that the BTC/USD pair remained firmly below $41,000 on Friday after volatility during the last Wall Street session.
Thursday, US markets reacted sharply to the “rise” in Treasury yields, the Nasdaq 100 fell 2%, dragging the highly correlated cryptocurrencies with it.
US stocks fall in a dramatic reversal as yields emerge. Nasdaq 100 drops 2% as US 10 and yields jump by 7bps to 2.9%. pic.twitter.com/vlgaW9F62C
— Holger Zschaepitz (@Schuldensuehner) April 21, 2022
With it, Bitcoin briefly lost more than $3,000 in a matter of hours, dipping as low as $39,800 before recovering.
Another macroeconomic trigger was the beginning of the reduction of the balance sheet of the Federal Reserve. This measure, which will also put pressure on stocks and risk assets, has long been priced in to combat the highest inflation of the last forty years, but has not been seen in the data so far.
“It appears that the Fed’s balance sheet expansion has stopped short of the $9 trillion mark,” summarized the day the market commentator Holger Zschaepitz.
“The Fed’s total assets have shrunk by $9.6 billion to $8,955.9 billion. The balance is now equal to 37.3% of US GDP, compared to 83% for the ECB and 137% for the Bank of Japan. “.
As Cointelegraph reported, the European Central Bank (ECB) has yet to show any signs of reducing its own balance sheet, which is approaching $10 trillion.
Fed Chairman Jerome Powell’s comments served to add further angst to the market, hinting at further major interest rate hikes in May.
Crypto traders therefore remained cautious, with several noting that the week’s run to near $43,000 had not been accompanied by adequate volume, suggesting that its validity was suspect from the start.
“Low volume raises are not to be trusted. They are used for distribution or to maintain control of sellers”, warned the popular trader Roman on Twitter.
“We have seen many cases of low volume rallies in the last 6 months, which have failed at major resistances. Be careful.”
In that six-month period, Bitcoin bulls have failed to break out of a stiff trading range despite multiple rallies within that same range.
Ethereum is at risk of going back to $2,600
Meanwhile, the drop on Thursday spelled trouble for altcoins, with Ether (ETH) dipping below $3,000.
In the best classic style, the top ten cryptocurrencies by market capitalization copied Bitcoin’s weakness with daily losses of around 4%.
For trader and analyst, Rekt Capital, the Ethereum pullback was significant, opening the door for a deeper drop to $2,600.
could $ETH dip to $2600 this month?
After all, Sept’ 2021 has shown how volatile retests of the black ~$3000 level can be to the downside (Chart 1)
Revisiting ~$2600 could still be a possibility if #ETH Weekly Closes below the Ascending Triangle top (Chart 2)#crypto #Ethereum pic.twitter.com/2cUq9lZvBG
— Rekt Capital (@rektcapital) April 21, 2022
Could ETH drop to $2,600 this month?
After all, September 2021 has shown how volatile retests of the ~$3,000 black level on the downside can be (Chart 1).
A return to ~$2,600 could still be a possibility if ETH closes the week below the top of the ascending triangle (Chart 2)
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.
Keep reading:
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.