The value of Bitcoin, currently at $78,152.78, may be headed for a downturn despite its slight increase. Having gained less than 0.5% since midnight UTC, the cryptocurrency is likely to face opposition as it approaches $80,000. According to Luke Deans, a senior research associate at Bitwise, short-term holders have a cost basis around $80,000, which may prompt them to sell and realize profits, thereby limiting any potential gains. The upcoming US March PCE inflation report, coupled with soaring oil prices and rising bond yields, is also expected to weigh on the market.
The recent decision by the Federal Reserve to maintain the federal funds rate has added to the uncertainty, with four dissenting voices calling for a change in monetary policy. Deans notes that altcoins remain closely tied to Bitcoin, with a high correlation and beta percentiles of 97% and 99%, respectively. This suggests that the price movements of altcoins may mirror those of Bitcoin.
Deans warns that underlying conditions are ripe for increased volatility, characterized by subdued liquidity and a lack of directional conviction. In such environments, significant price movements are often necessary to unlock new liquidity and drive market activity.