Investment

The price of bitcoins fell by 5% after failing to break $ 60,000 – here’s why


Bitcoin price (BTC) On March 21, it fell below $ 56,000 after repeated rejections by a resistance level of $ 60,000 over the past four days.

1-hour BTC / USD candle chart. Source: Tradingview

Despite approaching a net overrun of a key technical level, bitcoins show a weakness in the range of $ 59,000 to $ 60,500.

There are three main reasons for the stagnation: Treasury revenue growth, bear movements on Bitfinex and the struggle of the risky market.

High Treasury yields cause risks to fall in the markets

As the U.S. Treasury 10-year yield rises, appetite for risky assets tends to decline as investors may seek a safer yield-generating alternative in Treasury bonds.

Although bitcoin did not correlate closely with the Dow Jones, it did correlate closely with technology-intensive indices such as the S&P 500.

This suggests that the strong momentum of US Treasury bonds is leading to stagnation of risky assets, which reduces the tandem bitcoin dynamics, as previously Cointelegraph reported.

U.S. Treasury Department revenues began to burst above key levels beginning on March 19. Since then, bitcoins have been consolidating and aiming to grow above $ 60,000.

Holger Zschaepitz, market analyst at Welt, he said:

“Treasury yields have broken more key levels as bond traders have raised stakes that will allow the Fed to exceed inflation as the US economy recovers. Ten-year yields above 1.75% w / ING see “no real barrier” to moving up. “

The ten-year treasury yield rises above 1.7%. Source: Bloomberg, Holger Zschaepitz

In order for bitcoins to see a sustainable rally, they must see a favorable macro environment that would only be possible through the stabilization of USTreasura yields.

Selling pressure on Bitfinex with a resistance of $ 60K

According to a pseudonymous bitcoin trader and technical analyst known as the “Byzantine General”, there was serious selling pressure on Bitfinex.

Other derivatives trading platforms, such as Deribit, FTX and BitMEX, also saw a decent short interest, said the trader.

He he wrote:

“Yeah … The fucking isn’t over yet. Bitfinex is still interpreting. There was serious short interest in Deribit, Mex and FTX. However, OI is finally being released. “

Price of bitcoin with short interest. Source: Tradingview.com, Byzantine general

The combination of an unfavorable macroeconomic environment and selling pressure from both whales and derivatives traders is likely to consolidate bitcoins below $ 60,000.

However, in the foreseeable future, the likelihood of a rescue rally could increase if open interest in the futures market continues to ease.

The term open interest refers to the total sum of active positions in the futures market. When it declines, it means that there is generally lower trading activity regarding derivatives.

There is one positive catalyst

Willy Woo, a leading on-chain analyst, explained that bitcoins have a decent chance of falling below the $ 1 trillion market capitalization.

Woo noted that the UTXO Realized Price Distribution (URPD) indicator, which shows the realized price of all UTXOs on any given day, indicates that a market capitalization of $ 1 trillion works as a minimum price. He he said:

“URPD:” 7.3% of bitcoins last moved above $ 1. “This is a pretty solid validation of prices; investors already strongly support $ 1T. I’d say there’s a real chance we’ll never see bitcoin under $ 1T again. It’s only been 3 months since bitcoin broke $ 19.7k all the time – the maximum of the last macro cycle. But already 28.7% of bitcoins ranged at prices above 19.7 thousand. $. “

Realized distribution of UTXO prices. Source: Glassnode

Data from the chain also suggest that although there is short-term selling pressure, these movements are not large enough to indicate that the market expects a prolonged correction.



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