Bitcoin, ether kick off Q2 in the red as halving approaches
Bitcoin and ether took a sharp turn Tuesday morning while US stocks continued to kick off the second quarter of 2024 in the red
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Cryptocurrencies and US equities slid Tuesday, extending a decline that has both asset classes starting off the second quarter in the red.
Bitcoin and ether lost 5% and 7%, respectively, over 24 hours, according to data from Coinbase. Bitcoin (BTC) is now trading around $65,200 after managing to stay in the low $70,000 range over the weekend.
Ether (ETH) hovered at $3,200 Tuesday afternoon, per Coinbase, continuing a selloff that started Monday.
“The onset of [the second quarter] has been marked by pronounced deleveraging, evidenced by the decline in perpetual funding rates from ~80% to ~11% over the last three sessions,” research analysts at Wintermute wrote in a Tuesday note. “This reflects a broad correction, with traders closing out highly leveraged positions and reassessing flow.”
Read more: Why is 2140 the end of bitcoin inflation?
The S&P 500 and Nasdaq Composite indexes opened lower but recovered slightly later in the session, with each trading around 1% lower at time of publication. At its session low Tuesday, the benchmark Dow lost more than 500 points.
Analysts say changing expectations around the pace of interest rate cuts from the Federal Reserve has traders uneasy. Fed fund futures show a 40% chance central bankers will hold rates at their current level through June, according to CME Group.
The decline in crypto prices comes as bitcoin’s next halving event inches closer. The date of the largest cryptocurrency’s fourth halving is expected to be around April 19, 2024.
“While the short-term price impact of the halving has been mixed in the past, BTC tends to increase in the nine to 12 months post-halving,” analysts from research firm Kaiko wrote in a note Tuesday.
Read more: The history of Bitcoin halvings — and why this time might look different
Bitcoin is today closer to its most recent all-time high — $73,780.07, set in mid-March — than it has been for past halving events, but the landscape around the asset class also looks different.
“The approval of the spot ETFs contributed to a significant change in BTC’s supply-demand dynamics, which could impact price during and after the halving,” Kaiko analysts said.
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