(Kitco News) – The cryptocurrency market continued to show weakness on Tuesday as Bitcoin (BTC) spent a sustained amount of time trading below $60,000 for the first time since altcoins got hammered in late February.
Stocks also fell under pressure – along with gold, silver, and oil – after data released by the Bureau of Labor Statistics showed that the employment cost index, which measures compensation and benefits, came in hotter than expected, increasing 1.2% from December to March, the highest increase in a year.
Following four months of inflation readings that came in above expectations, this report further reduced the likelihood of an interest rate cut anytime soon. Some analysts have now started to actively consider that an interest rate hike could be on the horizon.
For that reason, investors are eagerly awaiting tomorrow’s decision on interest rates from the Fed following the conclusion of the Federal Open Market Committee meeting – where they are widely expected to hold rates steady – with extra attention going towards any hints Fed Chair Powell may give in his follow-up comments.
At the closing bell, the S&P, Dow, and Nasdaq all finished in the red, down 1.57%, 1.49%, and 2.04%, respectively.
Data provided by TradingView shows that after spiking to a high of $64,730 in the early hours on Tuesday in response to the launch of spot Bitcoin ETFs in Hong Kong, King Crypto experienced a steep sell-off that dropped it to a low of $59,040 in the afternoon.
BTC/USD Chart by TradingView
At the time of writing, dip buyers are attempting to stage a comeback rally, and Bitcoin trades at $59,740, a decrease of 5.05% on the 24-hour chart.
Win streak comes to an end
“Bitcoin is poised to break a seven-month winning streak, recording an 11% loss this month – the first since August 2023,” said analysts at Secure Digital Markets. “Several factors are at play here: fading hopes for Federal Reserve rate cuts, waning demand for U.S.-based spot BTC ETFs, and a general risk-off mood across financial markets have tempered the Bitcoin rally.”
“However, the continued growth of major stablecoins provides some support,” they noted. “Despite the downtrend, there's significant trading activity, particularly around the $60,000 level.”
Part of the weakness stems from declining inflows into spot BTC ETFs, they said, after “the market saw another wave of outflows, totaling $51.6 million. Notably, Blackrock has remained inactive, recording zero inflows over the last four sessions.”
“In Hong Kong, the debut of BTC and ETH ETFs fell short of expectations, garnering just $11 million in trading volume—far below the anticipated $100 million,” the analysts said. “U.S. ETFs fared much better on their first day, with trading volumes reaching $655 million.”
“On the stock market front, futures dipped into the red Tuesday following unexpected high wage data, stoking inflation worries ahead of Wednesday's Federal Reserve rate decision,” they noted. “The employment cost index, a key wage gauge, rose 1.2% in the March quarter, surpassing the forecasted 1%. This spike in treasury yields pulled the Nasdaq down by 0.5%.”
“As we close the month, stocks are on track for their first monthly loss since October, driven by sharply reduced rate cut expectations – from the six or seven cuts projected at the start of the year to just one in 2024,” the analysts concluded. “This change reflects ongoing inflation concerns and a resilient economy, suggesting the Fed may maintain higher rates for an extended period.”
As for the weakness in Bitcoin and the broader crypto market, crypto trader Bloodgood noted that each halving cycle has seen “a dump right before or slightly after the mining rewards halved,” which aligns with the current pullback.
“I have been around three halvings now, and every time there is panic among newbies,” he said. “Look at the bigger picture and don't use leverage until $70k is broken.”
No escape for altcoin traders
Safe havens for altcoin traders – aside from stablecoins – were few and far between as all but two tokens in the top 200 recorded losses on Tuesday.
Daily cryptocurrency market performance. Source: Coin360
Jito (JTO) and ZetaChain (ZETA) were the only bright spots, gaining 4.9% and 4.5%, respectively. Ordi (ORDI) was the biggest loser, falling 18%, while Amp (AMP) lost 15.1%, and Echelon Prime (PRIME) fell 14.9%.
The overall cryptocurrency market cap now stands at $2.2 trillion, and Bitcoin’s dominance rate is 53.4%.
