The TDR Three Takeaways for Bitcoin:
- Bitcoin’s price fell under $66,000 as U.S. manufacturing data boosted the dollar index.
- Dollar strength and economic indicators suggest decreased likelihood of immediate Fed rate cuts, affecting Bitcoin.
- The broader crypto market shows vulnerability to U.S. economic trends, with altcoins also experiencing losses.
The last 24 hours have seen a downturn in Bitcoin prices to below $66,000 highlights the cryptocurrency’s sensitivity to broader economic trends, particularly the United States’ economic indicators. The unexpected expansion of U.S. factory activity in March, as indicated by the manufacturing purchasing manager’s index (PMI), has propelled the dollar index to new heights, exerting pressure on Bitcoin and the wider crypto market.Moreover, Bitcoin ETFs recorded a total net outflow of $85.7 million on April 1, according to data from Farside Investors. Data shows these investment products reached a total of $862 million in inflows last week as a comparison.
This morning large-scale liquidations on exchanges like Binance have led to sharp declines in Bitcoin and Ethereum prices, with nearly $157 million in derivatives positions liquidated in just one hour. In contrast, Solana-based meme coins such as Book of Meme, Catwifbag, and Tombili the Fat Cat have seen double-digit gains. The crypto options market, often a precursor to spot market movements, signaled this downturn, according to analysts at QCP Broadcast. Despite the market-wide correction, meme coins have demonstrated resilience, benefiting from a likely shift in capital from larger cryptocurrencies.
These economic indicators are closely watched as it marks the first growth in factory activity since September 2022, challenging the thesis of lower interest rates. The ripple effect of a stronger dollar, spurred by positive manufacturing data, underscores the relationship between traditional economic metrics and digital asset valuations. A strong dollar, by making dollar-denominated assets like Bitcoin more expensive for foreigners.
The likelihood of a Fed rate cut in June has dropped to 61.3% from 70.1% last week, according to the CME’s FedWatch tool. This comes as the market awaits further economic data this week, including job openings and durable orders for February, before the critical March payrolls report due Friday.
Additionally, the timing of these economic indicators is particularly critical, given the upcoming Bitcoin halving event. Historically, halving events have been associated with bullish market sentiment, yet the current economic context could influence the extent of this sentiment. The crypto market’s near-term trajectory will likely be influenced by several factors, including upcoming job reports and the overarching direction of U.S. monetary policy. Want to keep up to date with all of TDR’s research and news, subscribe to our daily Baked In newsletter.
