The price of Bitcoin, currently at $79,684.33, may be poised for a downturn despite its slight gain. Having risen by less than 0.5% since midnight UTC, the cryptocurrency is likely to encounter significant 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 could prompt them to take profits and sell, thereby limiting any potential gains. Furthermore, the upcoming US March PCE inflation report, coupled with soaring oil prices, may exert additional downward pressure on the market.
The recent decision by the Federal Reserve to maintain the federal funds rate has also had a negative impact, with four dissenting voices, the most since 1992, advocating for a rate cut or opposing the suggestion of future easing. Deans notes that altcoins remain closely tied to Bitcoin, with a high correlation and beta percentiles of 97% and 99%, indicating that their movements may mirror those of leveraged Bitcoin trades.
He also observes that beneath the surface, conditions are forming that are typically associated with increased volatility, characterized by subdued liquidity and a lack of directional conviction, which may necessitate price movements to unlock new liquidity.