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Bitcoin Shows Resilience Compared to Broader Crypto Market Despite Sell-Off: Fineqia

Bitcoin has displayed notable resilience when compared to the broader digital assets market, maintaining a dominance metric of 55.3%, marking its highest level since April 2021. According to Matteo Greco, a research analyst at digital asset investment firm Fineqia International, Bitcoin’s market cap dominance has reached its peak in three years despite recent sell-offs and market turbulence. Greco also highlighted the sustained strength in trading volumes. BTC Spot ETFs saw a weekly trading volume of about $16.2 billion, averaging around $3.2 billion daily. Since its inception, the cumulative trading volume has reached approximately $212 billion, with a daily average of roughly $3.3 billion.

Bitcoin Ends the Week in Red

Closing the week at approximately $65,650, BTC saw a 5.3% decrease from the previous week’s closing value of about $69,350. The week showcased significant volatility, especially over the weekend, after a comparatively stable period from Monday to Thursday. Friday marked a downturn for BTC, with its value dropping to a low of $65,100. This negative trajectory persisted into Saturday, reaching a weekly low of around $60,650 before recovering and ending the week near $65,650. Geopolitical tensions in the Middle East were cited as the reason behind the weekend’s price decline.

Following an announcement of a temporary halt in hostilities among the involved nations, market sentiment saw an improvement. Additionally, attention has been captivated by the upcoming halving scheduled for the night between April 19th and 20th. Historical data shows that previous halving events have typically led to 9-12 months of upward trends, although they have also triggered short-term “sell the news” reactions before and after the event. Reflecting this short-term bearish sentiment is a net outflow of $85 million from Bitcoin Spot ETFs during the week. Investors are proceeding cautiously and taking profits following the robust uptrend observed in Q4 2023 and Q1 2024.

US Inflation Data Surpasses Expectations

Recent US inflation data has surpassed expectations on the macroeconomic front, prompting a revision in market participants’ rate cut projections for 2024. Initial forecasts had suggested a reduction of at least 75 basis points, equivalent to three 25-basis-point cuts, in interest rates. However, the latest data has shifted projections to anticipate cuts of 25 to 50 basis points during the year, with the first cut expected in Q3 and a potential second cut towards year-end.

Matteo Greco commented, “The persistent presence of inflation levels exceeding central banks’ targets may lead to an extended period of tighter monetary policy. This could further compound the short-term challenges faced by risk-on assets, as investors adjust their portfolios in response to revised mid-term expectations influenced by the latest financial indicators.”

According to reports, digital asset investment products experienced minor outflows totaling $126 million in the past week. Specifically, Bitcoin saw outflows of $110 million but maintained positive inflows of $555 million month-to-date. Short-Bitcoin, which had been witnessing outflows for the past three weeks, saw minor inflows of $1.7 million, likely capitalizing on the recent price weakening.

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