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According to market value, Bitcoin (BTC), the largest cryptocurrency, is preparing to end a seven-month rising streak as it struggles with an 11% drop over the month at the time this article was written. This change, the first since August 2023, has brought BTC to a trading price of $63,200.
Factors Behind Bitcoin’s Price Drop
The recent decline in Bitcoin‘s price has been influenced by several factors. One significant factor is the decreased demand for U.S.-based spot Bitcoin exchange-traded funds (ETFs) coupled with the Federal Reserve’s (Fed) reduced likelihood of lowering interest rates. Additionally, a trend of moving away from risk in broader financial markets has also played a role in reducing the bullish trend for Bitcoin this month.
Despite these challenges, the continued increase in market value of leading stablecoins like USDT and USDC has provided some support to the market.
Analysts are closely monitoring the U.S. Treasury’s Quarterly Refunding Announcement scheduled for May 1. According to analysis by Singapore-based QCP Capital, issuing more short-term U.S. bonds could inject liquidity into the market, potentially boosting risky assets like Bitcoin. The announcement also indicates that the Treasury plans to borrow more during the April-June quarter, potentially increasing bond supply and yields, thus affecting investors’ sensitivity towards riskier assets.
Potential Increase in Bitcoin Dominance
Despite the recent price drop, Bitcoin’s dominance in the cryptocurrency market has risen to 57%, the highest level in three years. This breakout from a six-month consolidation pattern suggests that Bitcoin could outperform altcoins in the coming months.
Fairlead Strategies in its latest client report published on April 29, noted that the recent breakout in Bitcoin’s dominance indicates a preference for the largest cryptocurrency over altcoins in the medium term. This trend is supported by the weekly Relative Rotation Graph (RRG), which points to a downward trajectory for most altcoins. Fairlead Strategies also added that the breakout in Bitcoin’s dominance signals a continuation of a long-term recovery phase, with altcoins losing most of the gains made since early 2021.
