Bitcoin’s Decline to $57,000 Sparks Worries: BTC Investors Prepare for Market Volatility Prior to Crucial Federal Reserve Announcement.

The value of Bitcoin fell to $57,300 as investors were uncertain about what to expect ahead of the Federal Reserve announcement.
Long-term holders and large investors are reducing their demand, leading to speculation of a market decline.
Bitcoin and other cryptocurrencies have experienced a significant drop, reaching their lowest levels in over two months. This decline coincided with a general pessimistic sentiment in the market as investors awaited the Federal Reserve’s decision on interest rates. Bitcoin’s price dipped below $57,000 for the first time since late February, marking a decrease of nearly 4.5%.
Investors are feeling anxious as they await the Federal Reserve’s decision on interest rates. The market is eagerly anticipating the Fed’s comments on future rate hikes and the direction of monetary policy, as it seeks insights into potential changes in economic policy. Market participants will closely analyze Jerome Powell’s speech for any indications of interest rate cuts that could impact various asset classes, including cryptocurrencies.
According to a recent report from CryptoQuant, the decline in Bitcoin’s price is primarily driven by a significant decrease in demand from both long-term holders and large investors, often referred to as ‘whales.’ Long-term holders have reduced their monthly growth by 50%, going from over 200,000 BTC in late March to just 96,000 BTC. Similarly, whales have halved their growth rate from 12% in March to 6%, indicating a shift in market dynamics.
Market Anticipation of a Decline
Matteo Greco, a Research Analyst at Fineqia International, suggests that increased selling pressure from long-term holders often serves as an indication of broader market anticipation of a decline. This sentiment is reinforced by the decrease in demand, as seen in the sharp drop in Bitcoin purchases from spot exchange-traded funds (ETFs) in the United States. Daily purchases from these ETFs, which reached over $1 billion in mid-March, have significantly declined.
Adding to the downward pressure on Bitcoin’s price is an increase in selling activity by miners. Daily sales by miners in April have reached the highest levels since early January, indicating their need to cover operational costs or secure profits. Miners’ selling activity further contributes to the downward price movements in the cryptocurrency market.
Despite the expected positive impact of the Bitcoin halving in April, which typically leads to a price increase due to the reduction in new coin creation, the market continues to experience a decline. Following the halving, Bitcoin’s value dropped by an additional 15%, highlighting the influence of larger economic factors exerting pressure on the market.
Can Bitcoin Find Support at $57,000?
Looking ahead, there is hope that Bitcoin prices could bounce back from the $55,000 to $57,000 range based on valuation. This projection is based on the realized price of short-term holders, which is around $63,000. According to CryptoQuant, the $55,000 to $57,000 level is 10% below the current realized price of short-term holders, historically serving as strong support for prices during bull markets.
Bitcoin has shown resilience in its price movements historically, with reversals occurring around key realized price levels. For example, in January 2024, Bitcoin’s price reached a bottom after declining to the short-term holders’ realized price levels of around $38,500.
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