(Kitco News) – Bitcoin’s (BTC) price underwent a multi-day pump-and-dump over the weekend as King Crypto rallied from $58,000 on Friday to hit a high of $60,694 on Saturday, only to reverse course in the wake of a second assassination attempt on presidential candidate Donald Trump and retest support at $58,000 in early trading on Monday.
“The crypto market started the weekend on a positive note but has been unable to sustain gains in recent days, losing 2.8% in the last 24 hours to reach a capitalization of $2.04 trillion,” said Alex Kuptsikevich, senior market analyst at FxPro. “This retreat from the $2.12 trillion area looks like a new lower local high, continuing the March series, with the potential to return below $2 trillion and consolidate there.”
“Bitcoin climbed above $60.5K on Saturday but failed to consolidate at this level, running into resistance in the form of the 50-day moving average,” he added. “At the start of active trading in Europe, Bitcoin was trading below $58.7K. It is not out of the question that the momentum of the short-term rally has run its course and that a fresh move towards the lower end of the trading range at $53K will take place. However, we do not expect the markets to make any significant moves until the Fed's rate decision on Wednesday evening.”
Data provided by TradingView shows that Bears have continued to drive the BTC price action and now look to break the back of support at $58,000 on their way to a showdown with bulls at $57,000.
BTC/USD Chart by TradingView
Analysts are now divided on whether Bitcoin will continue to chop a path higher or return to lower support levels amid a backdrop of moderating inflation and interest rate cuts.
“Bitcoin has staged a robust recovery, surging over 15 percent from its recent low of $52,756, supported by a significant uptick in Bitcoin ETF inflows,” noted analysts at Bitfinex. “Over the past week, BTC ETFs recorded $403.9 million in net inflows, reversing a prolonged period of outflows and signaling renewed investor confidence in the asset.”
“Although Bitcoin is currently facing local resistance levels, both on-chain metrics and spot market activity suggest that momentum may currently be in favour of the bulls,” they added. “This rally has been driven predominantly by aggressive buying in spot markets. In contrast, the futures and perpetual markets have seen less pronounced movements, suggesting that the current price increase is grounded in genuine capital inflows rather than speculative leverage, providing a more sustainable foundation for the rally.”
“However, BTC now faces critical resistance levels between $60,500 and $61,000, which have been pivotal since early March,” Bitfinex analysts warned. “While ETF inflows remain strong, there are signs of a potential stall as Spot CVD - the difference between buy and sell orders across exchanges - has flattened over the weekend. We see the potential for market volatility this week as quite high, driven by investor anticipation of the Fed rate cut decision.”
“Whether the cut is 25 or 50 basis points, it could sway market sentiment between bullish optimism and cautious de-risking,” they said. “Meanwhile, Bitcoinʼs correlation with equities is intensifying, suggesting that movements in traditional financial markets could increasingly impact Bitcoin's price.”
“While equity correlation has increased significantly in recent times, Bitcoin has recently shown a decoupling from gold, with its prices dropping while gold reaches new record highs,” they noted.
“This divergence, marked by a negative correlation, reflects a risk-averse market sentiment with investors gravitating towards traditional safe-haven assets like gold over more speculative choices such as Bitcoin,” the analysts said. “We believe this trend could intensify in a post-rate-cut situation on the lower time frames. As such, the only foreseeable certainty in the immediate future is an increase in local volatility at these price levels. Traders and investors should prepare for potentially rapid and significant price movements.”
Their observations about volatility and the correlation between Bitcoin and stocks held up in early trading on Monday as equities also opened the day under pressure while market watchers prepare for the first interest rate cut in years. At the time of writing, the major indices are mixed, with the Dow up 0.37%, while the S&P and Nasdaq are down 0.19% and 0.91%, respectively.
The odds of a 50 bps cut continued to rise over the weekend, with the CME FedWatch Tool showing that Wall Street now puts the odds of a larger rate cut at 57%, up from 30% last week.
At the time of writing, Bitcoin trades at $57,780, a decrease of 4.15% on the 24-hour chart.
