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Subject to geopolitical, economic, and fiscal weights throughout April, bitcoin has once again proven its resilience as an asset. While a faster descent in its price could have been expected, the cryptocurrency closes the month of April with only a 10% decrease. More details to follow.
Bitcoin in the face of liquidations, gold, and inflation
While bitcoin closed the month of March above $70,000, April was not smooth sailing for the cryptocurrency. However, it demonstrated strong resilience because the US tax season significantly impacted its price. Several American investors had indeed liquidated their long positions to meet their annual tax obligations.
This was compounded by an increase in the cryptocurrency’s supply with the early-April sale of 1,999 BTC by the US government. Yet, bitcoin had already been under considerable pressure with the rise in the gold price over the last three months. Indeed, the yellow metal saw its price increase by 15%, setting a record not seen since the onset of the coronavirus crisis.
Unfortunately, neither the sustained increase in the US consumer price index nor the persistence of geopolitical tensions in the Middle East improved matters. On one hand, there were fears of persistent inflation and a relative deterioration of market sentiment. On the other hand, there were negative financing rates in the markets.
Bitcoin and the doubts about short-term trends after the halving
Bitcoin’s price was also affected by the drastic reduction in incoming ETF flows. This mistrust from institutional investors unfortunately adds to the uncertainty caused by the halving on short-term market trends. With doubts regarding the impact of the halving on mining viability and cost structures, the crypto’s volatility is not surprising.
Given all these weights, the 10% decrease after 7 consecutive months of rise is proof that the bitcoin market has reached a certain maturity. While its price is currently trading below $63,000, the crypto is undervalued and could soon surprise.
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Diplômé de Sciences Po Toulouse et titulaire d’une certification consultant blockchain délivrée par Alyra, j’ai rejoint l’aventure Cointribune en 2019.
Convaincu du potentiel de la blockchain pour transformer de nombreux secteurs de l’économie, j’ai pris l’engagement de sensibiliser et d’informer le grand public sur cet écosystème en constante évolution. Mon objectif est de permettre à chacun de mieux comprendre la blockchain et de saisir les opportunités qu’elle offre. Je m’efforce chaque jour de fournir une analyse objective de l’actualité, de décrypter les tendances du marché, de relayer les dernières innovations technologiques et de mettre en perspective les enjeux économiques et sociétaux de cette révolution en marche.
DISCLAIMER
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.