Bitcoin, currently trading at $78,394.11, is poised for a potential downturn despite its slight gains. The cryptocurrency has seen less than a 0.5% increase since midnight UTC, and any significant moves towards $80,000 are likely to be met with resistance.
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 take profits and sell, thereby limiting any potential gains. The upcoming US March PCE inflation report, coupled with high oil prices and rising bond yields, is also expected to weigh on the market.
The recent Federal Reserve decision to maintain the federal funds rate has further added to the uncertainty, with four dissenting voices calling for a change in 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 tokens may exhibit similar price movements to leveraged Bitcoin trades. Deans warns that beneath the surface, conditions are ripe for increased volatility, with subdued liquidity and a lack of directional conviction. In such environments, significant price movements are often necessary to unlock new liquidity.