The value of Bitcoin, currently at $80,235.26, may be due for a correction despite being slightly up. Since midnight UTC, the largest cryptocurrency has seen less than a 0.5% increase, and any significant 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 could prompt them to take profits and sell if the price moves above this level, thereby limiting any potential gains.
The upcoming US March PCE inflation report, coupled with high oil prices and rising bond yields, may further weigh on the market. The recent surge in West Texas Intermediate crude to $110 and reduced traffic through the Strait of Hormuz have kept energy markets on edge. The Federal Reserve's decision to maintain the federal funds rate, accompanied by four dissenting votes, has also impacted the market. Deans noted that altcoins remain closely tied to Bitcoin, with a high correlation and beta percentile of around 97% and 99%, indicating that tokens may move in tandem with leveraged Bitcoin trades.
"Underlying conditions that typically precede increased volatility appear to be emerging," Deans observed. "Liquidity remains low, with profit-taking and loss-taking largely offsetting each other, reflecting a lack of conviction in the market's direction." In such environments, price movements are often necessary to unlock new liquidity.
The derivatives market positioning also reflects a risk-averse sentiment.