Bitcoin slips towards $27K, down 9% on the week
Bitcoin’s downtrend continues to bite, with the cryptocurrency currently trading at around $27,500—down over 9% in the past week, per data from CoinGecko.
The decline in BTC erased Bitcoin’s early April gains above $30,000, moving below last month’s close of around $28,500.
Other leading cryptocurrencies also fell in the past week, with the majority of the top 10 cryptocurrencies by market capitalization excluding stable coinsdown double digits on the week.
A strengthening US dollar drove the decline, and the US central bank was expected to raise the benchmark interest rate by a further quarter of a basis point at the upcoming policy rate meeting in May. A higher-yielding dollar makes non-yielding assets like cryptocurrencies and gold less attractive.
Recently, Bitcoin has had a stronger correlation with gold than the stock market indices, according to data from The Valkyrie Fund– Especially after the collapse of Silicon Valley Bank, which triggered fears of bank failure.
Another factor reportedly brewing in the US economy is the debt ceiling crisis. The US Treasury has historic amounts of debt; the current debt exceeds the debt limit of $31.4 trillion, with about $31.46 trillion borrowed already.
The U.S. government debt ceiling is the maximum amount of debt the U.S. government can borrow to meet its financial obligations. Congress sets the debt ceiling, and a majority can change it.
A failure to take on more debt could lead to a financial crisis in the US as the government defers interest payments on US bonds. Market concern was evident as the value of credit default swaps for bets against the US dollar rose to 2008 levels.
While some Bitcoin advocates believe that the price of Bitcoin could increase if confidence in the US economy fails, the impulse reaction from a global financial crisis has created a lot of uncertainty in the markets.
Low liquidity conditions have also been instrumental in moving markets with relatively small orders. Last week, two April 20 sell orders worth $5.97 million triggered a bearish breakout in Bitcoin’s price, according to Riyad Carey, a researcher at Kaiko Data.
In a chirpingCarey highlighted the dangers of “thin order books” and low liquidity causing significant falls, due to orders of magnitude around 199.2 BTC, worth around $5.97 million, with BTC at $30,000.
Thin order books mean that there are relatively fewer buy and sell orders around the market’s trade price, which makes it easier for high-volume traders to move prices in both directions.
