Bitcoin volatility soars amid geopolitical tensions after halving – Blockchain News, Opinion, TV & Jobs
Written by Matteo Greco, Research Analyst at Fineqia International, a listed digital asset and fintech investment firm.
Bitcoin (BTC) ended the week at around $65,650, down 5.3% from the previous week’s close of around $69,350. This week, after a period of stability from Monday to Thursday, there was some notable volatility, especially over the weekend. On Friday, BTC suffered a downtrend, falling as low as $65,100, and the negative trend continued into Saturday, hitting a weekly low of around $60,650 before rebounding to end the week around $65,650.
The weekend price decline was driven by geopolitical tensions in the Middle East, with market sentiment improving following the announcement of a temporary halt to hostilities between the countries involved. In addition, attention is focused on the halving scheduled for the night of April 19th to 20th. Previous halving events have historically resulted in upward trends lasting 9 to 12 months, but they have often triggered short-term “sell the news” reactions before and after the event.
A combination of these factors likely contributed to the negative price action observed over the weekend. This near-term bearish sentiment is also reflected in net outflows of $85 million from Bitcoin spot ETFs this week, indicating increased profit taking and investor caution following a strong upward trend in Q4 2023 and Q1 2024.
Despite the economic downturn, trading volume for the BTC spot ETF remained robust, with weekly trading volume of approximately $16.2 billion and an average of $3.2 billion per day. Cumulative trading volume since inception is currently approximately $212 billion, with average daily trading volume of approximately $3.3 billion.
BTC continues to demonstrate its resilience compared to the broader digital asset market through our dominance metric, which measures BTC market capitalization relative to the overall digital asset market capitalization, which is currently at 55.3%, the highest level since April 2021.
On the macroeconomic front, recent US inflation data has surpassed expectations, changing market participants’ expectations of a rate cut in 2024. Initially, a minimum of 75 basis points (equivalent to three 25 basis point cuts) was expected. From interest rates. However, the latest data suggests a 25/50 basis point cut is expected sometime this year, with the first cut expected in the third quarter and the second likely towards the end of the year.
If inflation levels continue to exceed the central bank’s targets, tight monetary policy may persist for an extended period of time. This may further contribute to the short-term challenges facing risk assets as investors rebalance their portfolios in response to revised medium-term expectations influenced by the latest financial indicators.
