The week kicked off on a bearish note for bitcoin as momentum selling intensified following Monday’s daily close. Just after midnight UTC on Tuesday, a surge in selling pressure pushed bitcoin from nearly $70,000 to a low of $66,000 within the first hour of the Tuesday trading session, marking a significant $4,000 or -5% decline. Notably, this sharp downturn triggered over $108 million in long liquidations, marking the fifth largest liquidation event of the year thus far.

Two key factors may have influenced the downturn. First, the surge in the 10-year U.S. Treasury yield, reaching its highest point of the year, likely contributed to bitcoin’s decline on Monday. As Treasury yields rise, traditional assets such as bonds become more appealing to investors seeking safer returns, potentially diverting investment away from riskier assets like bitcoin. Interestingly, despite the strengthening of the U.S. dollar typically associated with rising Treasury yields, bitcoin experienced a downturn even as the dollar weakened. This deviation from the usual correlation between Treasury yields and bitcoin suggests additional underlying factors impacting the market.

The other factor might’ve been the US government’s recent movement of a test transaction involving seized bitcoins from the now defunct Silk Road darknet marketplace. The transaction, part of a larger stash of approximately 30,174 BTC worth $2 billion, raised concerns about potential liquidation. This action, combined with a history of governments selling seized bitcoins, likely contributed to bitcoin’s weakness at the beginning of the week in confluence with the other mentioned macro headwinds

Bitcoin Bulls Make a Come-Back

Bitcoin was able to stage a bullish reversal on Thursday, climbing almost 5% or $2500 to close the day at ~$68,500. With this move, bitcoin clawed back close to half of its losses from earlier in the week, now only facing a -5% drop instead of the -10% or $7000 downturn starting from the weekly open.

Thursday saw almost the same number of leveraged short liquidations as it did long liquidations on Monday, with close to $100 million in short positions being wiped out on the move up. To end the trading week on the NYSE, bitcoin ended the week trading at $67,555 on the CME Futures chart, representing a moderate 5% overall depreciation on the week.

Technical Analysis

Looking at the candlestick chart pattern that has formed over the past 30 days, bitcoin is showing signs of equilibrium, meaning price is trading in a tighter range, with higher lows, but at the same time lower highs, indicating buyers and sellers are at an impasse.

This could also be viewed as a symmetrical triangle pattern, visualized by converging trend lines connecting the lower highs and higher lows. The breakout direction from these patterns is uncertain until it occurs, though typically continuing in the direction of the preceding trend.

Bitcoin Dominance

It is worth pointing out the trend in the bitcoin dominance metric, which measures the market capitalization of bitcoin on a percentage basis relative to the overall cryptocurrency market. We are seeing on the weekly timeframe a break above the 54% dominance threshold after weeks of being locked in a mostly sideways range. This suggests an outflow of capital from the altcoin sector and increased flows going into the bitcoin markets instead.

ETF Flows Update

Spot ETF flows remained relatively steady throughout the week, with a net outflow observed on Monday followed by consecutive days of inflows for the remainder of the week. The majority of outflows continue to be attributed to Grayscale’s ETF, likely due to its higher fees compared to competitors. Nevertheless, total inflows across all spot ETFs now surpass $12.6 billion.

With the bitcoin halving approximately two weeks away, historical data from past halving cycles indicates an average price appreciation of around 16.6% in the thirty days leading up to the event. Given bitcoin’s trading price of approximately $68,000 thirty days before the upcoming halving on April 19–20th, it’s statistically likely that bitcoin will maintain or surpass these levels leading up to the event.

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