Bitcoin price slides 5% after failing to break $60K — Here’s why

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The price of bitcoin (BTC) fell on the 21st. March below $56,000 after bouncing off the $60,000 resistance level multiple times over the past four days.

1 hour candlestick chart BTC/USD. Source: View of the shop

Bitcoin price slides 5% after failing to break $60K — Here’s why

Despite approaching a clear breakout of a key technical level, bitcoin is showing weakness in the $59,000 to $60,500 range.

There are three main reasons for the stagnation: rising Treasury yields, bearish moves on Bitfinex and difficulties in the risk market.

High yields on US government bonds lead to lower market risk

When U.S. government bond yields rise above 10 years, interest in risky assets diminishes as investors in government bonds may seek a safer alternative for yield.

While bitcoin has not shown a strong correlation with the Dow Jones, it has shown a strong correlation with technology-intensive indices like the S&P 500.

This suggests that the strong momentum in US Treasuries is leading to stagnation in risky assets, which is reducing bitcoin’s momentum, as previously reported by Cointelegraph.

U.S. government bond yields have been rising since the 19th century. March began to significantly exceed the level. Since then, bitcoin has been consolidating and trying to get above $60,000.

Holger Zschaepiec, market analyst at Welte, said:

Treasury yields broke through other key levels as bond traders pondered whether the Fed will allow inflation to rise above limits as the U.S. economy recovers. 10-year yields above 1.75% w/ING sees no real obstacle to a rise.Interest rates on 10-year Treasury bonds have risen above 1.7%. Source: Bloomberg, Holger Tschaepitz.

Bitcoin price slides 5% after failing to break $60K — Here’s why

Bitcoin needs a favorable macroeconomic landscape for a sustained rally, which is only possible if US government bond yields stabilize.

Bitfinex selling pressure on 60K resistance

According to a bitcoin trader and technical analyst, aka Byzantine General, Bitfinex was under heavy selling pressure.

Other derivatives trading platforms, such as Deribit, FTX and BitMEX, have also seen decent short-term interest, the trader said.

He wrote:

Yeah, um… Shit, it’s not over yet. Bitfinex is still unloading. There was significant short interest in Deribit, Mexico City and FTX. I’m finally relaxed.Bitcoin price with short interest. Source: Tradingview.com, a Byzantine general

Bitcoin price slides 5% after failing to break $60K — Here’s why

The combination of unfavorable macroeconomic terrain and pressure from whales and derivatives traders has likely caused bitcoin to consolidate below $60,000.

However, the likelihood of a recovery in the near future may increase if open interest in the futures market continues to decline.

The term open interest refers to the total sum of active positions in the futures market. If this indicator is falling, it means that there is generally less activity in derivatives trading.

There is a positive catalyst

Willy Woo, a well-known blockchain analyst, said bitcoin has a good chance of not falling below $1 trillion in market capitalization again.

Wu noted that the UTXO Realized Price Distribution (URPD) indicator, which shows the realized price of all UTXOs on a given day, indicates that the market capitalization of $1 trillion acts as a price threshold. He said:

URPD : 7.3% Bitcoin has recently reached a price of over $1T. This is a pretty solid price validation; $1T is already actively backed by investors. I’d say there’s a good chance we’ll never see bitcoin go below $1T again. It’s only been three months since bitcoin broke through the $19.7k mark throughout the last macro cycle. But already 28.7% of bitcoins have gone to prices above $19.7k.UTXO distribution of realized prices. Source: Glassnode

Bitcoin price slides 5% after failing to break $60K — Here’s why

The blockchain data also suggests that while there is short-term selling pressure, the moves are not large enough to suggest that the market is expecting a prolonged correction.

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Emilia James
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