Bitcoin experienced a consecutive decline as the new month and quarter commenced, influenced by surging Treasury yields and the robustness of the U.S. dollar.
The leading cryptocurrency saw a substantial drop of over 4.76% on Tuesday, plummeting to $66,134.00, marking a two-day decrease of 7%, as reported by Coin Metrics. At its lowest point, it dipped to $64,572.00.
On the preceding Monday, Bitcoin was trading around $70,000 until data revealed an expansion in the manufacturing sector for the first time since September 2022, coupled with diminishing investor expectations of rate cuts in June. Consequently, Bitcoin has now retreated from its record high achieved on March 14, by approximately 11%.
Ether, following suit, experienced a downturn of 5.6%, settling at $3,240.27.
In tandem with Bitcoin's decline, the 10-year U.S. Treasury yield surged to its peak for the year, while the U.S. dollar, which typically moves inversely to Bitcoin, reached a five-month pinnacle.
Joel Kruger, market strategist at LMAX Group, remarked, “Bitcoin doesn’t need much excuse to go through a period of correction after such an explosive performance in Q1." He added, "Having said that, U.S. economic data has been stronger of late, all while inflation continues to be a concern. This has resulted in a repricing of Fed expectations, translating to broad-based U.S. dollar demand on the more attractive U.S. dollar yield differentials.”
The downward movement of Bitcoin may have been amplified by a significant transfer of over 4,000 bitcoins to the Bitfinex exchange by a large holder, commonly referred to as a “whale.” Data from CryptoQuant indicates a surge in the exchange's reserves, typically indicating heightened selling activity, coinciding with the sudden decline in Bitcoin's price late Monday night.
Stocks associated with Bitcoin's performance faced downward pressure, although they rebounded from their lows by the end of the day. Cryptocurrency exchange Coinbase saw a 2% decline, while software provider MicroStrategy, often correlated with Bitcoin's price, experienced a 3% loss. Leading mining stocks, Marathon Digital and Riot Platforms suffered losses of 8% and 7%, respectively. CleanSpark, one of the top-performing miners this year, saw a 9% slide.
April could prove to be a turbulent period for cryptocurrencies and related stocks, particularly mining stocks. Investors are eyeing the upcoming Bitcoin halving, slated for the second half of the month, which will reduce miners' rewards and subsequently their revenue. While the event may impact miner performance, historically, it has set the stage for Bitcoin to embark on rallies of 300% or more in the ensuing months.
Despite the recent downturn, Bitcoin maintains a year-to-date increase of 55% as of 2024.