Bitcoin prices have dropped below $93,000 following disappointing US GDP figures, which revealed a -0.3% contraction in Q1. Despite this selling pressure, BTC ‘whales’ are still accumulating, while smaller holders are taking profits. The current market situation is described as a ‘profit-taking pressure test’ for Bitcoin as it grapples with mixed inflation signals and potential short-term fears of recession.
Bitcoin is sliding below the $93,000 mark, following troubling US GDP figures. The recently released data shows a 0.3% contraction for Q1, which is significantly under the expected growth of 0.3%. This disappointing result has raised recession alarms. Adding to the unease is the GDP Price Index, which has surged to 3.7%, the highest figure we’ve seen since last August. Some market watchers now put the likelihood of a recession in 2025 at 67%, alongside consumer confidence diminishing to its lowest level since May 2020.
In related economic news, the Personal Consumption Expenditures (PCE) inflation rate fell to 2.3% in March, which was just above the predicted 2.2%. Meanwhile, Core PCE came in at 2.6%, meeting expectations. However, adjustments in February’s figures saw Core PCE revised up from 2.8% to 3.0%, adding to the mixed picture of inflation we’re currently facing.
When considering Bitcoin’s future, there’s this curious mix of short-term bearish pressures against long-term bullish sentiments. Reflecting back on the 2020 market crash—triggered by the COVID-19 pandemic—Bitcoin initially stumbled along with traditional financial markets but then soared over 300% by the year’s end, in part due to the global money supply increase. Right now, however, stagflation looms, evidenced by that negative GDP figure alongside heightened inflation.
Industry observers note that high inflation can often dissuade retail customers from diving into cryptocurrencies. We saw this very trend unfold back in 2022 when Bitcoin nosedived by 60% as the Federal Reserve ramped up interest rates. Notably, the recent PCE data hints at a possibility of easing inflation pressures. This may soothe investors regarding potential Fed rate hikes and support Bitcoin’s stance in the market.
Yet, the upward revisions from February on PCE figures do indicate ongoing inflationary concerns, complicating the Fed’s future direction. While fears surrounding stagflation may cloud Bitcoin’s short-term prospects, its long-standing potential as a hedge remains.
Additionally, Bitcoin is experiencing a significant drop in spot volume delta, to the tune of $300 million over just three days. This upheaval raises sell-off concerns as Bitcoin now faces pressure around the $95,000 point. Insights from Glassnode reveal that negative flows have been recorded in consecutive days along the 7-day moving average for BTC’s spot volume delta.
To break it down: On April 26, this saw a minor decline of $16 million, which escalated to $30.9 million on April 27, followed by $76.1 million on April 28, and a sharp $193.4 million drop on April 29. This trend illustrates a robust selling sentiment and declining spot demand, hinting at profit-taking actions or perhaps a shift in market direction.
Despite this widespread sell-off, some reports indicate that accumulation persists among Bitcoin ‘whales.’ Those holding over 10,000 BTC appear to still be in buying mode, with a trend score nearing 0.95. However, it’s a different story for smaller holders; those with 10-100 BTC are trending at about 0.6, while the groups holding 1-10 BTC and less than 1 BTC are showing signs of selling off more.
So, the current scenario seems intertwined with short-term holders potentially cashing in their profits around this $95,000 mark. It’s what’s being labelled a “profit-taking pressure test” for Bitcoin, and we’re really at a critical juncture here. Monitoring profit-taking trends will be crucial in the upcoming days.
As for the market’s implications, last week hit a high in realized profits, surging to about $139.9 million per hour, indicating it’s around 17% above the steady baseline of $120 million per hour. With the current outflow in spot delta, we might see realized profits shoot up to new record levels this week.
