Bitcoin Volatility Soars Amidst Geopolitical Tensions as Halving Approaches

Bitcoin
(BTC)
wrapped
up
the
week
at
approximately
$65,650,
registering
a
5.3%
decline
from
the
previous
week’s
closing
value
of
around
$69,350.
The
week
unfolded
with
notable
volatility,
particularly
over
the
weekend,
following
a
period
of
stability
from
Monday
to
Thursday.
On
Friday,
BTC
experienced
a
downturn,
dropping
to
as
low
as
$65,100,
with
the
negative
trend
persisting
into
Saturday
when
it
hit
a
weekly
low
of
about
$60,650
before
rebounding
and
concluding
the
week
around
$65,650.

The
weekend’s
price
drop
was
attributed
to

geopolitical
tensions
in
the
Middle
East,
with
market
sentiment
improving
after
an
announcement
regarding
a
temporary
halt
in
hostilities
among
the
involved
nations.
Additionally,
attention
is
focused
on
the
upcoming
halving,
scheduled
for
the
night
between
April
19th
and
20th.
While
previous
halving
events
have
historically
been
followed
by
9-12
months
of
uptrend,
they
have
often
triggered
short-term
“sell
the
news”
reactions
before
and
after
the
event.

The
confluence
of
these
factors
likely
contributed
to
the
observed
negative
price
action
over
the
weekend.
This
short-term
bearish
sentiment
is
also
reflected
in
the
net
outflow
of
$85
million
from
Bitcoin
Spot
ETFs
during
the
week,
signalling
increased
profit-taking
and
investor
caution
following
the
strong
uptrend
in
both
Q4
2023
and
Q1
2024.

Despite
the
downturn,

trading
volumes
remained
robust,
with
BTC
Spot
ETFs
recording
a
weekly
trading
volume
of
approximately
$16.2
billion,
averaging
$3.2
billion
per
day.
The
cumulative
trading
volume
since
inception
now
stands
at
around
$212
billion,
with
an
average
daily
trading
volume
of
approximately
$3.3
billion.

BTC
continues
to
demonstrate
resilience
compared
to
the
broader
digital
assets
market,
with
its
dominance
metric,
that
gauges
the
BTC
market
capitalisation
in
comparison
to
the
whole
digital
assets
market
capitalisation,
currently
at
55.3%,
the
highest
level
since
April
2021.

On
the
macroeconomic
front,
recent
US
inflation
data
surpassed
expectations,
leading
to
a
shift
in
market
participants’
rate
cut
projections
for
2024.
Initially,
expectations
were
for
a
reduction
of
at
least
75
basis
points
(equivalent
to
three
25-basis-point
cuts)
in
interest
rates.
However,
following
the
latest
data,
projections
now
anticipate
25/50
basis
points
cuts
during
the
year,
with
the
first
cut
expected
in
Q3
and
a
potential
second
cut
towards
year-end.

The
continued
presence
of
inflation
levels
surpassing
central
banks’
targets
might
result
in
a
prolonged
period
of
tighter
monetary
policy.
This
could
further
contribute
to
the
short-term
challenges
faced
by
risk-on
assets,
as
investors
realign
their
portfolios
in
response
to
revised
mid-term
expectations
influenced
by
the
latest
financial
indicators.