Bitcoin has shown remarkable resilience compared to the broader digital asset market, maintaining a dominance metric of 55.3%, its highest level since April 2021. In a recent note, Matteo Greco, research analyst at Fineqia International, highlighted Bitcoin's market capitalization dominance. Defying the recent sell-off and market volatility, it hit a three-year high. Greco also pointed to the continued robustness of trading volumes.
The BTC Spot ETF recorded significant weekly trading volume of approximately $16.2 billion, with an average daily volume of approximately $3.2 billion. Since its founding, the cumulative trading volume is approximately $212 billion, and the average daily trading volume is approximately $3.3 billion.
Bitcoin ends the week in red
Bitcoin closed this week at around $65,650, down 5.3% from last week's close of around $69,350. This week, after a relatively stable period from Monday to Thursday, we saw some notable volatility, especially over the weekend. BTC tumbled on Friday, falling to a low of $65,100.. The negative trend continued into Saturday, reaching a weekly low of around $60,650 before rebounding to end the week around $65,650.
The weekend price decline is interpreted as a result of geopolitical tensions in the Middle East. However, market sentiment improved following the announcement of a temporary cessation of hostilities between the countries involved. In addition, the halving scheduled for the night of April 19th to 20th is also attracting attention. Historically, previous halving events have been followed by upward trends for 9 to 12 months, but have triggered short-term “sell the news” reactions before and after the event.
Short-term bearish sentiment was further reflected in net outflows of $85 million from Bitcoin spot ETFs this week. Investors are paying attention and engaging in profit-taking following the strong upward trend witnessed in Q4 2023 and Q1 2024.
US inflation data beat expectations.
On the macroeconomic front, recent US inflation data has surpassed expectations, leading market participants to revise their forecasts for a rate cut in 2024. Initially, interest rates were expected to be cut by at least 75 basis points, which would equate to three 25 basis point cuts. However, the latest data suggests a 25/50 basis point cut is expected sometime this year, with the first cut expected in the third quarter and the second cut towards the end of the year.
Greco highlighted the possibility of tighter monetary policy over the longer term due to persistently high inflation levels exceeding the central bank's targets. He also suggested that this scenario could exacerbate the near-term difficulties in risk assets, which could lead investors to adjust their portfolios based on revised medium-term expectations influenced by current financial indicators.
Last week, fund outflow from digital asset investment products decreased slightly, with a total outflow of $126 million. Bitcoin has seen outflows amounting to $110 million, but has maintained positive inflows of $555 million per month to date. Short Bitcoin, which had been showing an outflow over the past three weeks, appears to have taken advantage of the recent price weakness to show a small inflow of $1.7 million.
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