Exposed to geopolitical, economic and fiscal constraints throughout the month of April, bitcoin once again proves its resilience as an asset. While we could have counted on a faster decline in its price, the cryptocurrency closed the month of April with a drop of only 10%. Details below.
Bitcoin faces liquidations, gold and inflation
If bitcoin closed the month of March above $70,000, April was not a smooth ride for the cryptocurrency. However, it showed strong resilience because the US tax season significantly affected its price. Several American investors had in fact liquidated their long positions to meet their annual tax obligations.
Added to this was the increase in the supply of cryptocurrency with the sale at the beginning of April of 1,999 BTC by the American government. However, bitcoin was already under significant pressure with the increase in the price of gold over the last three months. The yellow metal has indeed seen its price increase by 15%, setting a record never reached since the start of the coronavirus crisis.
Unfortunately, neither the sustained increase in the US consumer price index nor the persistence of geopolitical tensions in the Middle East have improved things. On the one hand, there was fear of the persistence of inflation and a relative deterioration in market sentiment. On the other hand, we have seen negative financing rates on the markets.
Bitcoin and doubts related to short-term trends after the halving
The price of bitcoin was also affected by the drastic drop in ETF inflows. This distrust of institutional investors unfortunately adds to the uncertainty caused by the halving on short-term trends on the market. With doubts related to the impact of halving on the viability of mining and the cost structure, the volatility of crypto is not surprising.
Faced with all these constraints, the 10% drop after 7 consecutive months of increase is proof that the bitcoin market has reached a certain maturity. If its price is currently trading below $63,000, the crypto is undervalued and could soon surprise.
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