Key Points
- Bitcoin (BTC) price drops ahead of the halving event, affected by factors including geopolitical conflict and a strengthening U.S. Dollar Index (DXY).
- Spot Bitcoin ETFs face slow inflows, with most ETF issuers recording zero flows over recent days.
Bitcoin’s value took a hit on April 17, with the market eagerly anticipating the halving event set to happen on April 20.
The cryptocurrency opened at $63,814 on April 17, but fell by 7.5% to an intra-day low of $59,648.
Factors Affecting Bitcoin’s Price
Bitcoin’s price correction has recently been influenced by a variety of factors.
These include the escalating geopolitical conflict in the Middle East, stagnating demand for spot Bitcoin ETFs, a strengthening U.S. Dollar Index (DXY), and a weakening technical setup.
On April 17, Bitcoin’s price dropped by 3% over the last 24 hours, with slowing flows into spot Bitcoin ETFs contributing to the sell-side pressure.
Spot Bitcoin ETFs Struggle
Data shows that U.S. spot Bitcoin ETFs experienced another day of net outflows totaling $58 million on April 16.
This was further impacted by outflows from Grayscale Bitcoin Trust (GBTC) and ARK 21Shares Bitcoin ETF (ARKB), amounting to $79.4 million and $12.9 million respectively.
Most ETF issuers recorded zero flows over the last few days, causing market participants to question the situation.
James Seyfartt, a Bloomberg ETF analyst, explained that around 83% of all ETFs on the U.S. market saw zero inflows on April 14.
According to Seyfartt, this is a normal occurrence as shares of an ETF are only created and redeemed when there is a large enough mismatch in supply and demand and the cost to do so is lower than hedging.
In the case of Bitcoin ETFs, these creation units range from 5,000 to 50,000 shares.
U.S. Dollar Index Rises
The U.S. Dollar Index (DXY), which tracks the USD’s performance against top world currencies, has risen 2.56% from its April 10 low of 103.52 to a six-month high of 106.169 on April 16.
This marks its best five-day run in 14 months, attributed to expectations of sustained higher interest rates.
Higher interest rates often encourage foreign investors to take advantage of greater returns on bonds and term deposits, increasing the demand for the dollar.
From a technical perspective, the U.S. dollar Index is on track to rise by more than 0.87% toward the November 2023 high at $106.757.
Bitcoin’s Crucial Support Level
Considering short-term BTC price action, traders have identified levels of crucial importance for Bitcoin.
On April 17, independent trader Ali highlighted that the $62,000 level was Bitcoin’s “crucial support” level.
However, Bitcoin has since lost this support, which has now turned into an area of strong resistance for its bulls.
The In/Out of the Money Around Price (IOMAP) model shows that more than 1.15 million addresses previously bought approximately 630,110 BTC at a $62,858 to $64,670 price range.
The IOMAP chart also indicates that Bitcoin faces stiff resistance in its recovery path compared to the support it has on the downside, suggesting that the path with the least resistance is downward.
