Bitcoin, currently trading at $79,843.90 with minimal gains, may face a significant challenge. The cryptocurrency has seen less than a 0.5% increase since midnight UTC, and any substantial move towards $80,000 is likely to encounter opposition. 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 advance.
The upcoming US March PCE inflation report, coupled with high oil prices and rising bond yields, may further weigh on the market. The recent Federal Reserve decision to maintain the federal funds rate, along with the significant number of dissenting voices, is also affecting market sentiment.
Deans notes that altcoins remain closely tied to Bitcoin, with a high correlation and beta percentiles of 97% and 99%, respectively. This suggests that altcoins may move in tandem with Bitcoin, similar to leveraged trades. Deans warns that beneath the surface, conditions are forming that typically precede increased volatility, characterized by subdued liquidity and a lack of directional conviction.
In such environments, price movements are often necessary to unlock new liquidity.