Bitcoin (BTC) price fell below $ 56,000 on March 21 after repeated rejections from the $ 60,000 resistance level for the past four days.
Although Bitcoin is nearing a clean break through key technical levels, it is showing weakness in the $ 59,000- $ 60,500 range.
There are three main reasons for the stagnation: the rise in government bond yields, the bearish moves in Bitfinex, and the battle of the risk market.
High yields on US Treasuries lead to a collapse in risky markets
As 10-year US Treasury yields rise, the appetite for risky assets tends to decrease as investors look to Treasuries for a safer, higher-yield alternative.
While Bitcoin hasn’t seen a close correlation with the Dow Jones, it has seen a close correlation with tech-heavy indices like the S&P 500.
This suggests that the strong momentum in US Treasuries is causing risk-weighted assets to stagnate and Bitcoin momentum falling at the same time, as Cointelegraph previously reported.
US Treasury bond yields began to break above key levels on March 19. Since then, Bitcoin has been consolidating and struggling to surpass $ 60,000.
Holger Zschaepitz, market analyst at Welt, said:
“Treasury bond yields passed more important levels as bond traders increased bets that the Fed will overshoot inflation as the US economy recovers. 10-year yields above 1.75% w / ING are seeing” nothing real Barrier “for an increase.”
In order for Bitcoin to experience a sustained rally, there must be a favorable macro landscape that would only be possible by stabilizing the U.S. Treasury Department’s returns.
Selling pressure on Bitfinex at $ 60,000 resistance
According to a pseudonymous Bitcoin trader and technical analyst named “Byzantine General”, Bitfinex has been under serious selling pressure.
Other derivatives trading platforms like Deribit, FTX and BitMEX also saw decent short interest, the trader said.
“Yeah … Fuckery is still not over. Bitfinex is still discharging. There was serious brief interest in Deribit, Mex & FTX. OI is finally relaxing.”
The combination of an unfavorable macro landscape and selling pressure from both whales and derivatives traders likely resulted in Bitcoin consolidating below $ 60,000.
In the foreseeable future, however, the likelihood of a relief rally could increase if the open interest of the futures market continues to ease.
The term open interest refers to the total amount of active positions on the futures market. If this decreases, it means that there is generally less trading activity in terms of derivatives.
There is a positive catalyst
Willy Woo, the well-known on-chain analyst, said that Bitcoin has a good chance of not falling below the market capitalization of $ 1 trillion again.
Woo noted that UTXO’s URPDO (Realized Price Distribution) indicator, which shows the realized price of all UTXOs on a given day, shows that the $ 1 trillion market cap is acting as the price floor. He said:
“URPD: ‘7.3% of Bitcoins recently moved at prices above 1 t $.’ This is a pretty solid price validation. T $ 1 is already heavily supported by investors. I would say there is a fair chance we will never see Bitcoin below $ 1 again. It’s only been 3 months since Bitcoin turned 19th , Has broken $ 7,000 all time. High of the last macro cycle. But already 28.7% of Bitcoins were trading at prices above 19.7 thousand USD. “
The on-chain data also shows that there was short-term selling pressure, but these measures are not big enough to indicate that the market is anticipating a longer correction.