These are the reasons why the price of Bitcoin dropped 5% after failing to break above the $ 60,000 level
BTC fell below $ 56,000 on Sunday as several bearish signals emerged.
The price of Bitcoin (BTC) fell below $ 56,000 on March 21 after being rejected multiple times at the $ 60,000 resistance level in the past four days.
Despite being closer to cleanly surpassing that key technical level, Bitcoin has been showing weakness in the $ 59,000 to $ 60,500 range.
There are three main reasons behind the price stagnation: rising US Treasury yields, bearish moves on Bitfinex, and difficulties in the risk asset market.
High US Treasury Yields Cause Risk Markets to Slump
When the yield on 10-year US Treasuries rises, the appetite for risky assets tends to decline because investors may seek safer yield-generating alternatives in Treasuries.
Although Bitcoin has not registered a close correlation with the Dow Jones, it has seen a close correlation with indices dedicated to technology, such as the S&P 500.
This suggests that strong momentum from US Treasuries is causing risk assets to stagnate, reducing momentum for Bitcoin as a whole, as Cointelegraph previously reported.
Yields on US Treasuries began to exceed key levels since March 19. Since then, Bitcoin has been consolidating, struggling to break above $ 60,000.
Holger Zschaepitz, a market analyst at Welt, said:
“Treasury yields topped more key levels as bond traders raised bets that the Fed will allow inflation to be higher as the US economy recovers. 10-year bond yields top 1.75% and they have no real impediment to go up. “
For Bitcoin to see a sustainable rally, it needs to see a favorable macroeconomic outlook, which would only be possible by stabilizing US Treasury yields.
Sell pressure on Bitfinex at $ 60,000 resistance
According to a pseudonym Bitcoin trader and technical analyst known as “Byzantine General”, there has been a lot of selling pressure on Bitfinex.
Other derivatives trading platforms, such as Deribit, FTX, and BitMEX also posted decent short interest, the trader said.
He wrote: “Yes … the problems are not over yet. They are still selling on Bitfinex. There was a short interest in Deribit, Mex and FTX. However, the open interest is finally calming down.”
The combination of an unfavorable macroeconomic outlook and selling pressure from both whales and derivatives traders likely caused Bitcoin to consolidate below $ 60,000.
However, for the foreseeable future, the likelihood of a relief rally could increase if open interest in the futures market continues to subside.
The term open interest refers to the sum total of active positions in the futures market. When this decreases, it means that, in general, there is less trading activity related to derivatives.
There is a positive catalyst
Willy Woo, renowned on-chain analyst, explained that Bitcoin has a decent chance of never falling below the trillion dollars of market capitalization.
Woo noted that the UTXO Realized Price Distribution (URPD) indicator, which shows the realized price of all the results of an unspent transaction (UTXO), indicates that the $ 1 trillion market capitalization is acting as a bottom for the price. . He said:
“URPD: ‘7.3% of bitcoins last moved at prices above $ 1 trillion”. This is a pretty solid price validation; the trillion dollars is already heavily backed by investors. I would say that there is a good chance that we will never see Bitcoin below a trillion dollars again. It’s only been 3 months since Bitcoin broke the all-time high of $ 19,700 from the last macro cycle. But already 28.7% of the bitcoins moved at prices above $ 19,700. “
The on-.chain data also indicates that while there has been short-term selling pressure, these moves are not large enough to suggest that the market is anticipating a prolonged correction.
Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not be attributed to, Infocoin.