Data Indicate That Bitcoin Price in $70K Is Likely To Persist

Decreased leverage utilization in Bitcoin futures significantly lowers the likelihood of cascading liquidations during a BTC price downturn.

Source: www.coinkolik.com

Since March 25, Bitcoin has faced challenges in sustaining its value above the $71,000 threshold, which some may interpret as a signal of bearish momentum. However, analysis of the BTC derivatives market suggests a more stabilized environment, with the previous excessive optimism notably diminishing.

The Robustness Of U.S. Inflation Reinforces The Bullish Argument For Bitcoin

Currently, Bitcoin struggles to maintain stability above the $70,000 mark. Some analysts perceive the unexpected resilience in recent U.S. inflation figures and the unsustainable fiscal trajectory of the U.S. government as favorable conditions for investing in scarce assets. They attribute the inflation surge to the extensive monetary expansion orchestrated by the U.S. Federal Reserve throughout 2020 and 2021. Consequently, the Federal Reserve might be compelled to uphold elevated interest rates. However, this approach faces constraints, particularly concerning the interest burden of U.S. government debt.

Increased interest rates pose challenges for businesses and households, particularly in terms of refinancing or obtaining new loans. This typically dampens investor enthusiasm for risk-on assets, thus impeding economic growth. In 2024, investors began seeking alternative investment avenues apart from the U.S. Treasury bonds. Over the past 30 days, both gold and Bitcoin have surged to record highs. While U.S. government 2-year notes plummeted to a nine-month low on April 9, this trend indicates a diminished investor appetite for a 4.7% fixed-income yield as a hedge against inflation.

Bitcoin's Short-Term Performance Could Be Influenced By Movements In The Stock Market

Bitcoin detractors argue that the recent decline in the S&P 500 index from its peak of 5,265 on March 28 could foreshadow an impending economic downturn. Considering the significant correlation between Bitcoin and the stock market, which has exceeded 80% in the past month, Bitcoin's value might initially decrease should stock market concerns persist.

Despite encountering obstacles at the $72,000 mark, the BTC futures and options markets are showing a neutral stance. This equilibrium is emphasized by two key indicators, which indicate a more robust demand for leverage now compared to the end of March. Concerns about excessive leverage are justified, given that the open interest in BTC futures stands at $34.3 billion. While it's uncertain if Bitcoin will exceed its record highs soon, the risk of a significant sell-off due to excessive leverage seems to have decreased. Therefore, barring a substantial downturn in the broader economy, it appears improbable that Bitcoin will drop below $65,000.

Disclaimer: FameEX makes no representations on the accuracy or suitability of any official statements made by the exchange regarding the data in this area or any related financial advice.