Categories: Crypto NewsNews

Bitcoin retests $40K after stock market crash meets US Fed balance sheet bust

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Nonhlanhla P Dube
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Bitcoin (BTC) was on its way to $40,000(R 625k) on April 22 after a huge reversal in stocks cut the bulls’ latest gain short.
According to data from TradingView, BTC/USD was kept firmly under $41,000(R 640k) on April 22 following volatility during the most recent Wall Street trading session.

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On April 21, US markets reacted abruptly to “surging” Treasury yields, with the Nasdaq 100 plunging 2% and dragging down highly-correlated crypto with it. With that, Bitcoin quickly lost almost $3,000( R 47k) in a matter of hours, plummeting to about $39,800( R621k) before regaining its footing.

Meanwhile, another macro-trigger arrived in the form of the US Federal Reserve’s balance-sheet reduction program finally getting underway. The action to tackle forty-year record inflation was long factored in but was not visible in the data until today, putting pressure on stocks and risk assets.

“It appears that the Fed’s balance sheet expansion has paused just before the $9 trillion ( R 40.5tn) mark,” market observer Holger Zschaepitz summarized on the day.

“The Fed’s total assets have decreased by $9.6 billion (R 150 bn) to $8,955.9 billion (R 139bn). The balance sheet now equals 37.3 percent of US GDP, compared to the ECB’s 83 percent “and 137 percent for BoJ.” 
It is believed the European Central Bank (ECB) has yet to demonstrate evidence of lowering its own balance sheet, which is close to $10 trillion( R 156tn).

Fed Chair Jerome Powell’s comments added to the worry, hinting at additional major interest rate hikes in May.

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As a result, cryptocurrency traders remained cautious, with numerous observing that the week’s run to around $43,000 ( R 672k) had not been accompanied by adequate volume, implying that its validity was doubtful from the beginning.

“Pumps with low volume should not be used. They are employed for distribution or to maintain seller control “Roman, a well-known Twitter trader, issued a warning.

“Over the last six months, we’ve seen a slew of low-volume pumps fail at high resistance. Be careful .”
Despite several rallies within that range, Bitcoin bulls have been unable to break out of a tight trading range during the last six months. 

In a classic way, the top ten cryptocurrencies by market capitalization mimicked Bitcoin’s weakness, with daily losses of roughly 4%.

The Ethereum retest was significant for a trader and analyst Rekt Capital, as it opened the door to a deeper drop to $2,600 (R41k)

Ethereum risks return to $2,600( R41k). Meanwhile, the April 21 rout caused more misery for altcoins, with Ether (ETH) falling below $3,000(R 47k).

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Nonhlanhla P Dube

Nonhlanhla P Dube is a senior news reporter at Rateweb. Nonhlanhla is a student of International Relations at the University of South Africa. She reports primarily on personal finance and economics. You can contact her directly by email at nonhlanhla@rateweb.co.za

Published by
Nonhlanhla P Dube