Altcoins
Here’s Why Bitcoin and Altcoin Prices Could Crash After Halving?
Bitcoin price fell from an all-time high as it failed to maintain momentum and fell below support levels around $68,300 and $63,400. Experts predicted a fall below $60,000 for the consolidation to rebound after Bitcoin halved and today the BTC price fell to a low of $59,768. Can Bitcoin Halving Trigger a Sudden Shift in Sentiment to Cause a Massive Rally in Crypto Markets?
1. Bitcoin Options Expiration
The Bitcoin halving is estimated on Saturday, April 20. Before that, more than $2 billion worth of Bitcoin and Ethereum options are set to expire on Friday.
On 21k BTC options with a notional value of $1.35 billion is set to expire, with a put-call ratio of 0.63. The maximum issue is $65,000, according to Deribit data. Moreover, 27,785 ETH options Cryptocurrencies with a notional value of almost $0.90 billion are set to expire, with a put-call ratio of 0.42. The maximum critical point is $3,125. Both BTC and ETH are trading below their maximum point, leading to high volatility in the cryptocurrency market.
However, the major test for the market will come at the month’s expiration on April 26. 88,000 BTC options of notional value $5.5 billion Both call and put options are about to expire. The put/call ratio is 0.66, indicating that call options are significantly higher than the open interest of call options. The maximum price of pain is $60,000, indicating a high probability that BTC price will trade below $60,000 after the Bitcoin halving.
Moreover, 860,000 ETH options of notional value $2.6 billion are set to expire, with a put-call ratio of 0.51. The maximum pain point is $3,100. Thus, the market will prepare for the expiration of more than $8 billion worth of Bitcoin and Ethereum options.
Source: Déribit
Bitcoin and Ethereum open interest drops due to lack of upcoming interest, with derivatives volumes also down. Traders call for $100,000 in September.
2. Bitcoin historical model
As the Bitcoin halving draws closer, the Bitcoin and crypto market has experienced a pre-halving sell-off, similar to past Bitcoin halving events. A sudden increase in BTC price to an all-time high is not sustainable as it usually takes a few months to stabilize.
Elja Boom, Forbes 40 Under 40, said Bitcoin tends to experience bearish second and third quarters and believes the trend will continue this year. Additionally, an increase in the cost of BTC mining will result in minors to sell their holdings as the mining reward is halved to 3,125 BTC. He said: “I’m not bearish on BTC and crypto, but I wouldn’t mind a few months of sideways action after 7 straight months.”
However, he still predicts a price target of over $150,000 for Bitcoin and a price target of over $12,000 for Ethereum. Altcoins will also see a massive surge amid growing crypto adoption.
Source: Elja
3. Fed rate cut delay and macroeconomic uncertainty
The hottest CPIThe PPI and PCE inflation figures, the robustness of the labor market and the resilience of the US economy give the Federal Reserve room to consider delaying rate cuts. Chairman of the Fed Jerome Powell and vice president Philip Jefferson recently reported a delay in rate cuts, with some reports even predicting only two rate cuts this year.
The stock and crypto market rallies were triggered by speculation about Fed rate cuts in March, later delayed until May. However, the latest inflation reports have prompted Fed swaps to postpone rate cuts until September. This caused a reversal in the stock and crypto markets. CEO of 10x Research Markus Thielen
The claimed CPI data is more crucial than the Bitcoin halving. The CPI rose to 3.5%, causing the BTC price to drop.
J.P. Morgan and other Wall Street banks estimated that inflation would remain high for months. Analysts are now predicting that Bitcoin price will fall below $60,000 and even as low as $52,000. In a new 10x Search report, Markus Thielen said: “The price rise may not be immediate and the decline may open to 60,000 or even 52,000.”
4. Iran-Israel tensions
Tensions between Iran and Israel have caused a loss of nearly $500 billion. cryptocurrency liquidations the last days. The global crypto market grew from $2.64 trillion to $2.21 trillion. The situation did not calm down as the Israeli war cabinet held meetings on how to respond after Iran’s airstrike.
This and other macroeconomic events caused US Dollar Index (DXY) to climb above 106, the highest level since early November. Also 10-year US Treasury yield (10 years American) jumped to a 6-month high of 4.622%, failing to pull back. While Bitcoin is moving opposite the DXY and Treasury yields, a rise in both has caused Bitcoin’s price to drop to $60,000.
Kaiko reported that BTC’s 90-day correlation The US Dollar Index fell to -0.24, its lowest level in over a year due to higher-than-expected US inflation data and escalating geopolitical tensions.
5. Release of BTC ETFs
Spot Bitcoin ETFs saw a fourth consecutive outflow this week, with a net outflow of $165 million Wednesday. Bitcoin ETF purchasing activity has declined significantly in recent days, likely due to declining institutional interest and tax filings in the United States.
The outgoing flows of GBTC in grayscale showed signs of slowing down this week. However, on April 17, GBTC outflows increased from $79.4 million to $133.1 million. Ark 21 Shares Bitcoin ETF (ARKB) also had another day of negative outflows and Bitwise Bitcoin ETF (BITB) saw its first-ever outflow of $7.3 million on Wednesday.
6. Bank runs due to the end of the BTFP
Treasury Reserve balances fall rapidly as TGA increases and BTFP depletes. Without BFTP, banks risk falling again as the Fed delays rate cuts and conditions look bleak. The Bank Term Funding Program (BFTB) is an emergency lending program created by the Federal Reserve to provide additional financing to banks.
In March 2023, a sudden failure of banks like Silvergate Bank, Signature Bank, and Silicon Valley Bank led the Fed and Treasury Department to grant BFTP support to banks amid a massive bank run. Experts said that when BTFP stopped making new loans, much of its constant liquidity was withdrawn. This is a short-term decline for the markets.
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