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Bitcoin price chart (CoinDesk)
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Featured SpeakerAlex ThornHead of Firmwide ResearchGalaxy
Hear Alex Thorn share his take on "Bitcoin and Inflation: It’s Complicated” at Consensus 2023.Secure Your Seat
Bitcoin (BTC) continued its recent consolidation below $28,000 on Monday.
The largest cryptocurrency by market capitalization was recently trading at around $27,350, down 0.4% in the past 24 hours, according to CoinDesk data. BTC dropped below $28,000 on Friday afternoon, part of a two-day slide that followed a week above $30,000. At one point, bitcoin was changing hands near $27,100.
Sam Callahan, an analyst at bitcoin financial services firm Swan Bitcoin, told CoinDesk that BTC’s recent price drop can be interpreted as “a period of consolidation and a healthy correction after an explosive move upwards past $30,000 over the last several months.”
“Market participants seem to be exercising some caution in light of the heightened probability of the Federal Reserve maintaining interest rates higher for longer, as well as several economic metrics signaling weakness in the economy,” Callahan said.
Investors are eyeing next week’s Federal Open Market Committee (FOMC) meeting. The CME FedWatch Tool currently shows a 91% probability of the U.S. central bank raising interest rates 25 basis points (bps).
“Nevertheless, bitcoin’s value proposition as an asset without counterparty risk has never been more compelling amid the turmoil recently experienced in the banking sector, and the price reflects that,” Callahan added.
Ether (ETH), the second-largest cryptocurrency by market value, was changing hands around $1,833 on Monday, down 0.8% from Sunday, same time.
Over the past week, BTC and ETH have sunk 7% and 11%, respectively, as investors mulled over industry and macroeconomic uncertainties, including a drop in U.S. dollar liquidity. The CoinDesk Market Index (CMI), which measures overall crypto market performance, was recently almost flat for the day and down 9.3% for the week.
Crypto data firm Kaiko noted in a Monday report that despite the recent price drop, the BTC-to-gold ratio continued to head north last week, with one BTC equalling 14.7 ounces of gold in early April, up from 9 ounces at the beginning of the year.
Bitcoin to gold ratio chart (Kaiko)
“A rising ratio means that BTC is outperforming safe-haven gold despite the ongoing macro uncertainty and is a bullish signal,” Kaiko said, adding the ratio, which had previously fallen to its lowest level when the FTX exchange collapsed in November, rebounded this year.
Equities were trading mixed Monday afternoon, with the S&P 500 almost flat and the tech-heavy Nasdaq Composite sliding 0.3%. The Dow Jones Industrial Average (DJIA) was up 0.1% for the day.
In bond markets, the yields on both two-year and 10-year Treasury notes fell to 4.14% and 3.51%, respectively.
“Despite a weakening U.S. dollar and falling Treasury yields, cryptos are tentatively persona non grata for speculators,” Edward Moya, senior market analyst for foreign exchange market maker Oanda, wrote in a Monday note.
“Until crypto traders see a clear positive development on the regulatory side, bitcoin might remain stuck in a consolidation, currently trying to find the lower boundaries of its trading range,” Moya added.
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