The start of the week sees Bitcoin (BTC) embarking on a challenging journey to recover from a 15% decline in its price.
Following a weekend that shook the crypto sector, traders are dealing with the aftermath, but Bitcoin is showing signs of resilience.
The impact of geopolitical events is now in the spotlight for the upcoming week, with analysts drawing parallels between recent incidents in the Middle East and the cross-market crash due to COVID-19 in March 2020.
While alternative cryptocurrencies have faced the brunt of the sudden market reaction to tensions between Israel and Iran, Bitcoin has managed to hold onto its support level of $60,000.
In spite of this, a significant amount of leverage was wiped out, even affecting Bitcoin, with 30% of open interest disappearing instantly.
Looking ahead, there are several challenges to confront — volatility is already noticeable, and Bitcoin is just days away from its next block subsidy halving.
Expect continued turbulent conditions as Bitcoin’s price actions promise to keep things dynamic.
Cointelegraph delves into the current status of Bitcoin and the crypto markets in a rundown of the key triggers affecting BTC prices this week.
Bitcoin bulls rebound following crash to $61,000
This past weekend can be described as a nightmare for the crypto market, unlike anything witnessed before.
As news of fresh geopolitical tensions in the Middle East surfaced, the crypto markets, being the only ones open for trading 24/7, experienced immediate losses.
BTC/USD 1-hour chart. Source: TradingView
Similar to events in Ukraine earlier in 2022, both Bitcoin and alternative cryptocurrencies experienced sharp declines. BTC/USD dropped to just above $61,000.
Altcoins fared even worse, with some losing 50% of their value before starting a slow recovery alongside Bitcoin. As reported by Cointelegraph, Bitcoin’s dominance over the total crypto market cap reached a three-year high last week.
Altcoin total market cap 1-day chart. Source: TradingView
While the magnitude of these movements caught many off guard, prominent analyst Matthew Hyland pointed out that signs of a sudden correction were already present.
“Despite everything, Bitcoin is still consolidating near all-time highs. Altcoins were hit hard, but it might have been necessary to cleanse the market of highly leveraged and weaker positions,” he concluded in a post on X.
Source: Matthew Hyland
Examining the current order book data, well-known trader and analyst Credible Crypto observed ongoing changes in liquidity on the largest exchange, Binance.
“Spot prices are still holding strong, and everything else appears to be in good shape,” he summarized.
BTC/USDT liquidity chart. Source: Credible Crypto
Data from monitoring tool CoinGlass highlighted the combined liquidity across exchanges, indicating a significant volume of sell orders at $68,500 as of April 15.
“Bitcoin is still above its previous peak prices,” mentioned fellow trader Jelle, referring to monthly closure levels.
“Have faith.”BTC/USD chart. Source: Jelle
The recent weekly closure for BTC/USD around $65,750 was the lowest since early March, based on data from Cointelegraph Markets Pro and TradingView.
Geopolitical unease in the Middle East merges with recent Federal Reserve remarks
The following week will witness the usual mix of US macroeconomic data and commentary from key Federal Reserve officials, including Chair Jerome Powell.
Although not unusual in itself, the current environment is compounded by the events in the Middle East, potentially making risk assets even more sensitive.
“In a few hours, we will see how the market reacts to the geopolitical tensions over the weekend,” noted trading resource The Kobeissi Letter in its weekly diary update on X, referring to the commencement of trading in Asia and on Wall Street.
Key data to look out for this week include jobless claims due on April 18, while Powell is scheduled to speak on April 16.
Traders keep a close watch on inflation, as they have consistently adjusted their expectations regarding the timing of potential interest rate cuts this year.
According to CME Group’s FedWatch Tool, the probability of a 25-basis-point rate cut at the July FOMC meeting is currently at 43%, rising to 45% for September.
Federal Reserve target rate probabilities for the September FOMC meeting. Source: CME Group
“With the current market’s sensitivity to interest rates, any unfounded drop attributed to data that alters rate expectations should be treated as a buying opportunity,” commented financial analyst Tedtalksmacro to X subscribers in the recent macro market coverage.
“Fiscal spending holds the key power in this scenario.”
Focus on price volatility as halving week approaches
The market volatility over the weekend has somewhat overshadowed the upcoming block subsidy halving for Bitcoin.
With only four days left, the focus for traders is on the price rather than the crucial network event, despite the fact that anticipation for the halving has been building over several months.
Miners are at the forefront of these changes, as their revenue model undergoes an immediate transformation with the 50% reduction in newly minted bitcoins per block to 3.125 BTC.
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