This week witnessed a period of relative stability in the Bitcoin market, punctuated by a significant shift in trajectory over the weekend.

Following weeks of subdued weekend price movements, the market experienced an unprecedented surge in volatility on Saturday afternoon. This surge coincided with Iran’s attack on Israel around 3:30 PM EST, triggering a rapid and substantial decline in Bitcoin’s price by approximately $7000, or roughly 10%, within a matter of hours. Beginning the weekend’s trading at approximately $68,000, Bitcoin plummeted to a low of $60,660 as the fog of war and the uncertain scope of the geopolitical conflict instigated widespread fear-driven selling across the broader crypto landscape.

Despite this sharp decline, bullish momentum swiftly emerged, leading Bitcoin to recover half of its losses by the week’s end, closing at $65,749 and marking a modest decline of 5.2%.

However, the impact on the altcoin market was far more pronounced, with many altcoins experiencing double-digit declines, constituting the most significant weekly depreciation observed in the altcoin sector this year. Notably, these losses far exceeded those experienced by Bitcoin, with several altcoins registering declines of 20–30%, magnitudes greater than the decline in Bitcoin’s value.

This stark contrast underscores Bitcoin’s resilience amid broader market turbulence and uncertainty, reaffirming its status as a relatively stable asset amidst volatility.

Bitcoin Dominance Skyrockets

Amid altcoin weakness, bitcoin has showcased strength in its market capitalization dominance. Bitcoin dominance surged by 4.23% this week, firmly establishing itself above the 54% mark and hitting a three-year high.

Bitcoin dominance reflects the proportion of total capital invested in bitcoin compared to the broader cryptocurrency market.

The notable 4.23% increase in dominance within the approximately $2.46 trillion crypto industry implies a substantial $104 billion shift of capital away from altcoins, potentially seeking refuge in bitcoin’s perceived stability. During periods of risk aversion across the crypto market, traders and investors tend to divest from riskier and more volatile altcoins, reallocating their holdings towards bitcoin, considered the safest and least volatile cryptocurrency asset.

Fundamental Headwinds

To start the week, the SEC shook the market when it issued a Wells notice to Uniswap, alleging unregistered securities activities. This regulatory action caused Uniswap’s native token, UNI, to drop 34% in value on the week. The uncertainty surrounding crypto regulations had a ripple effect on the broader crypto market, potentially contributing to a temporary downturn in bitcoin’s price.

This highlights the sensitivity of regulatory developments within the wider crypto industry.

Later in the week, even as early as Friday, global markets were already facing downside pressure as tensions began to escalate in the Middle East, fueled by intelligence reports suggesting a possible imminent strike on Israel by Iran. This raised concerns about the potential escalation into a broader global conflict, prompting a widespread sell-off across various asset classes. Major indices such as the S&P 500 and Nasdaq, along with traditional safe-haven assets like gold and silver, experienced significant declines by week’s end. Additionally, the dollar strengthened by 1.66% over the week, reflecting a classic “fear trade” on a macroeconomic scale, which consequently impacted bitcoin as well. Of course, the market saw the fear realized when the attack happened the following day.

Hong Kong ETF Approval

Amid the market’s challenges, there were pockets of optimism. This week saw Hong Kong’s Securities Regulatory Commission possibly fast-tracking approval for four spot Bitcoin ETFs, anticipated before April 15. Similar to the approval of spot Bitcoin ETFs in the United States, this move could widen bitcoin accessibility in Hong Kong, potentially increasing buying activity.

As observed with the SEC’s approval of spot ETFs, inflows within the US spot markets have caused significant price surges. Consequently, the possible approval of spot bitcoin ETFs in Hong Kong holds the potential to exert a further bullish influence on bitcoin’s price.

Excess Liquidations

The weekend’s fear trade sparked the 2nd largest long liquidation event of the year, with a total of $784 million long positions liquidated on Friday, and then another $771 million long positions liquidated on Saturday. Close to $1.5 billion in long positions were wiped out in two days.

The record for the largest long liquidation event remains the long squeeze experienced on March 4, where close to $880 million in long positions were wiped out in a single day.

ETF Flows

Spot ETF flows saw slightly negative outflows this week, with inflows on Wednesday and Thursday countered by outflows during the remaining days. Monday recorded the largest outflow, totaling -$224 million.

Despite this, total net assets remained stable at $56.22 billion, marking only a 1.3% decrease from the previous week’s $56.96 billion.

As the halving approaches within a week, historical data from past halvings suggests that prices tend to maintain relative stability in the lead-up to the actual reduction in block rewards.

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