Why is Bitcoin Price Down Today?

Cryptocurrency

Summary:

Bitcoin price is down today as on-chain data shows BTC accumulation lagging behind the asset’s issuance and outflows from the spot BTC ETF.

Bitcoin price is down 23% from its March 14 all-time high of $73,835 reached on March 14 and recently fell to a two-month low of $56,500 on May 1.

Data from Cointelegraph Markets Pro and TradingView showed that the pioneer cryptocurrency has been sealed in a downtrend for almost 60 days, signaling a potential shift in market sentiment as more traders continue to book profits. Why is Bitcoin Price Down Today? _1

BTC/USD daily price chart. Source: TradingView

Let’s look at the reasons why the Bitcoin price is down today.

Bitcoin holders are accumulating less

BTC price has been in a bit of a lull since the initial post-halving correction, which presented “prime buy zones” for late investors.

However, data from Glassnode shows Bitcoin accumulation has failed to keep up with the BTC issuance rate. The chart below shows that all investor cohorts have accumulated just over 10,000 BTC over the last 30 days, against 19,000 BTC issued over the same timeframe. Why is Bitcoin Price Down Today? _2

Bitcoin holdings all cohorts vs. Issuance. Source: Glassnode

Commenting on this phenomenon, James Van Straten, lead analyst at CryptoSlate, said this was happening for the “second time in the past few months.”

The other time was in March, which was followed by a 17% BTC correction between March 14 and March 19.

The accumulation trend score cohort is a metric that assesses the quantity of BTC accumulated by different investor cohorts over the past 15 days. It employs a slightly different moving average that bolsters a similar narrative.

Following the intense accumulation until March, which propelled BTC to its all-time high, all cohorts began selling off their assets shortly after. The severe distribution has persisted since, with the latest data from March showing no signs of change. Why is Bitcoin Price Down Today? _3

BTC trend accumulation score by cohort. Source: Glassnode.

As shown in the IOMAP chart below, more than 47.42 million Bitcoin addresses are in profit at current prices. This means sell-side pressure will continue to mount amid profit-taking, lowering the BTC price. Why is Bitcoin Price Down Today? _4

Bitcoin IOMAP chart. Source: IntoTheBlock

Bitcoin ETF flows turn negative again

Investors’ de-risking behavior was also visible across the spot Bitcoin exchange-traded funds (ETFs), where traders have resumed withdrawing their capital.

After recording positive net flows for two consecutive days, data from Farside Investors shows U.S.-based spot Bitcoin ETFs recorded outflows totaling $15.7 million on May 7. Why is Bitcoin Price Down Today? _5

Bitcoin ETF flow table. Source: Farside Investors

Grayscale’s GBTC fund, which witnessed its first netflows after 78 days on May 3, was the primary driver behind May 7 ETF withdrawals with a total of $15.7 million outflows.

At the same time, inflows into other Bitcoin ETFs continued to slow down. Flows into BlackRock's iShares Bitcoin Trust (IBIT) have been at a standstill since April 24, only seeing inflows on May 3 and May 6.

“Yesterday’s ETF Flows came in at -$15.7M,” noted independent market analyst Daan Crypto Trades, adding that flows were “mostly flat on the day, which was also clear in the #Bitcoin price action.”

Source: Cointelegraph

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Thomas

Economic

The next government will be forced to hit voters with post-election tax rises and delay net zero investment unless it is prepared to rip up Treasury rules for managing the state finances, a leading thinktank has said.

The National Institute for Economic and Social Research (Niesr) called for a radical overhaul of the self-imposed constraints imposed on government borrowing and debt as it warned that persistently weak growth and lower inflation would make hitting the rules more difficult.

In its quarterly health check, the thinktank said the economy had emerged from recession but the “not-fit-for-purpose” fiscal rules meant there was no scope for Jeremy Hunt to offer fresh tax cuts before polling day.

After the general election, Niesr said a future chancellor would be faced with a choice: raise taxes to maintain the existing provision of public services or rewrite the rules so that they served the UK's medium- and long-term needs and objectives – including raising the growth rate, levelling up the regions and greening the economy.

Official growth figures are due out on Friday and Niesr said it expected output to have risen by 0.4% in the first three months of 2024. For 2024 as a whole, it is pencilling in growth of 0.8%, down slightly on the 0.9% it predicted three months ago.

Although it believes the annual inflation rate will fall below the government's 2% target over the next few months, the thinktank said the Bank of England would delay cutting interest rates until August this year, and would only reduce borrowing costs once more in 2024. The Bank is widely expected to hold rates at 5.25% when it meets on Thursday.

Prof Stephen Millard, Niesr's deputy director for macroeconomics, modelling and forecasting, said: “Despite the welcome fall in inflation, UK growth remains anaemic. This will make it difficult for any incoming government to carry out the much-needed investment in infrastructure and the green transition, as well as increase spending on public services and defence, without either raising taxes or rewriting the fiscal rules.

“This makes clear the need to reform the fiscal framework to enable the government to do what is needed for the economy in a fiscally sustainable way.”

The current fiscal rules state that the debt-to-GDP ratio – which is now just below 100% – should be falling within a five-year horizon and the annual deficit-to-GDP ratio should be below 3% by the end of the same period.

Niesr said debt would still be rising as a percentage of national income in five years' time, and the government would still be borrowing more than 5% of GDP to balance its books. Its forecasts do not include the additional £75bn over the next six years needed to increase the defence budget to 2.5% of GDP by 2030.

The thinktank said there was essentially no scope for pre-election tax giveaways, as the government's spending plans did not meet the fiscal rules. Any future tax cuts or increases in public investment would require a revision to the current fiscal rules.

Niesr said: “The existing framework is not fit for purpose and inadvertently creates an incentive structure which arbitrarily constrains sound government borrowing plans. Instead, a revised set of fiscal rules would better serve the United Kingdom by incorporating medium- to long-term economic objectives. For example, the United Kingdom is legally obligated to reach net zero by 2050. This target will only be met if supported through well-judged public investment in green infrastructure.”

The thinktank's quarterly outlook said there were few signs of levelling up and that there was some evidence of widening regional disparities.

After the squeeze caused by the cost of living crisis, living standards are expected to rise by 6% on average in 2024-2025 relative to 2023-4 but with differences between poor and well-off households.

Above-inflation rent increases would mean those in the bottom income decile would see a 2% drop in their living standards, while those on middle and higher incomes would enjoy a 7-8% rise.

Source: The Guardian

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

FastBull Featured

Remarks of Officials

Roberto Perli, Manager of the System Open Market Account (SOMA), delivered a speech on the balance sheet reduction issue at the Annual Primary Dealer Meeting of the Federal Reserve Bank of New York on May 8, Eastern Time. While the position of SOMA manager does not determine the Fed's policy stance, Perli plays a crucial role in implementing monetary policy. He oversees SOMA's $6.7 trillion securities portfolio and leads monetary policy implementation as directed by the FOMC. Therefore, his considerations regarding balance sheet reduction are highly significant, and the specifics of the reduction will be greatly influenced by him (his predecessor is the current Dallas Fed President Lorie Logan).

The key points of the speech are as follows.

Since last October, the balance sheet reduction plan has progressed as expected. Despite another $520 billion reduction in our holdings, including $412 billion of Treasury securities and $108 billion of agency mortgage-backed securities (MBS), control over short-term interest rates has continued to be strong. The effective federal funds rate (EFFR) has remained remarkably stable since the FOMC last raised the target range in July of last year. There has been no usage of the Standing Repo Facility (SRF) outside of test transactions, which means that there has been no need as yet to rely on this facility to keep the federal funds rate within the target range.

Our overnight reverse repo (ON RRP) facility has also remained a primary focus in recent months.

The over $1.7 trillion decline in ON RRP balances since the debt limit suspension last June is entirely consistent with how that facility was designed. In fact, the ON RRP has absorbed virtually the entirety of balance sheet runoff, on net, which is primarily why reserves have not declined since the runoff process started. I can confidently say that the ON RRP has supported the efficient implementation and transmission of monetary policy so far.

As specified in the May 1, 2024 FOMC statement and implementation note, effective next month, the redemption cap for Treasury securities will be lowered to $25 billion per month, while the redemption cap for agency debt and MBS will be left unchanged at $35 billion. In the unlikely event that agency debt or MBS paydowns exceed this amount, they will be reinvested in Treasury securities to roughly match the maturity composition of Treasury securities outstanding. In other words, the Committee did not shift its stance on monetary policy last week.

Similarly, at some point in the future, when the FOMC judges that reserve balances are somewhat above the level consistent with ample reserves, it will instruct the Open Market Trading Desk at the New York Fed (the Desk) to stop reducing the size of the balance sheet. When the Committee judges that reserve balances are at an ample level, it will manage securities holdings to maintain an ample level of reserves over time. All of this means that, over the long run, the balance sheet is likely to expand to accommodate trend growth for the Federal Reserve's liabilities.

Slowing runoff provides more time and opportunity for the FOMC to evaluate changes in market conditions. It also provides more time for individual institutions to adjust to a lower supply of reserves. Ultimately, I expect that this approach will allow money markets to continue to function smoothly with a lower level of reserve supply than would have been the case had runoff been allowed to proceed at its current pace for much longer.

With SOMA runoff set to slow, an obvious question is where the balance sheet may go from here. Over time, survey responses suggest expectations around the end size of the SOMA portfolio have consolidated somewhat. Among other factors, this probably reflects updated views around demand for Federal Reserve liabilities as well as evolving risks to the economic outlook.

Therefore, it is necessary to monitor factors such as the domestic bank activity in federal funds, the timing of interbank payments, the amount of daylight overdrafts, and the share of repo volume trading at or above the IORB.

Perli's Speech

Risk Warnings and Disclaimers

Add to Favorites

FastBull Featured

Remarks of Officials

In a speech delivered on May 8, BOJ Governor Kazuo Ueda said:

Japan's economy is expected to continue to grow steadily as overseas economies grow moderately, despite weakness in some sectors.

In terms of private consumption, the consumption of non-durable goods such as food has been impacted by the decrease in real income. However, recent indicators of household sentiment have shown significant improvement due to expectations of wage growth. Therefore, despite some temporary weakness in both corporate and household sectors, wages and prices continue to maintain a virtuous cycle. Furthermore, against the backdrop of increasing corporate profits and a tightening labor market, this year's wage growth rate is likely to exceed that of last year

Due to the continuing weakening impact of past cost increases on inflation, commodity prices continue to decline. Benefiting from a virtuous cycle of wages and prices, service inflation is rising moderately. Core CPI is expected to decline to 1.9% this year and next, rising to 2.1% in 2026. The BOJ currently assesses that the benchmark level for underlying inflation is below the 2% target; all indicators are on an uptrend, indicating that inflation is also on the rise.

Looking ahead, considering that the labor market is expected to remain tight, the virtuous circle of wages and prices is expected to gradually become the norm.

However, the inflation outlook remains at high risk. Higher crude oil prices and the depreciation of the JPY could increase the cost of imports and thus exert upward pressure on inflation.

If upside risks to the inflation outlook increase, the BOJ may raise rates earlier. Conversely, it could maintain its low interest rate policy for a longer period. In addition, if the economy and prices are subject to significant downside risks, the BOJ will consider all necessary measures.

Speech of Kazuo Ueda

Risk Warnings and Disclaimers

Add to Favorites

Warren Takunda

Forex

Economic

The Bank of England won't cut interest rates until September say some economists, which means a 'hawkish' repricing in interest rate expectations must follow today's decision.

This would surprise markets that have increased odds of a mid-year rate cut, in turn supporting the Pound.

Markets are now positioned at 50/50 odds for the first rate hike to take place in June, and we note a high risk that the Bank's Monetary Policy Committee verifies these bets by saying it is confident inflation will continue to fall.

But economists at Commonwealth Bank say the first interest rate cut is still some way off, in September, because wages growth and services inflation are "still very strong".

"If we are correct, the BoE may not be perceived as dovish enough today to justify market pricing of an August cut, supporting GBP," says Carol Kong, a strategist at Commonwealth Bank.

The Pound to Dollar exchange rate has lost ground in the days leading up to today's decision, falling from 1.2539 on Monday to 1.2483 today.

The exchange rate will recover recent losses and can potentially push beyond the 200-day moving average at 1.2542 if the Bank is unwilling to clearly commit to a June rate cut and ultimately leaves rates unchanged until September.

The Bank's MPC members are divided, with some (Dave Ramsden) leaning into a nearer-term rate cut, while others like Huw Pill are still keen to watch incoming data for clear proof inflation is falling. Others such as Catherine Mann and Jonathan Haskell have indicated in recent speeches they remain unready to vote for imminent rate cuts.

FX strategists at TD Securities say that in a 'hawkish' scenario Pound-Dollar could rise 0.45%. This would involve the Bank acknowledging recent upside surprises on services inflation support a slightly higher persistence of underlying domestic price pressures.

"In turn, while the statement is largely copy-paste, it puts a bit more emphasis on the potential for high for longer policy moving forward," says James Rossiter, a strategist at TD Securities.

Rossiter's base-case scenario heading into Thursday's MPC (55% odds) sees the MPC delivering another 8-1 vote to hold rates. Here, the statement is left largely unchanged, with the MPC reiterating that "the Committee will keep under review for how long Bank Rate should be maintained at its current level".

Under this scenario, Pound-Dollar can recover by approximately 0.15%, according to TD Securities.

Pound to Dollar Rate: 3 Bank of England Scenarios_1

Above: GBP/USD at daily intervals.

A downside scenario (25%) would see the Bank turn decidedly more 'dovish'. "The statement is tweaked slightly to indicate that policymakers are becoming more confident that persistent inflationary pressures are fading. In turn, the Committee's inflation forecasts are lower, in part due to a further step down in the assumption for inflation persistence," says Rossiter.

Here, the Pound could fall 0.35% against the Dollar.

"Our base case remains for an 8-1 vote today, with risk of 7-2, should Dave Ramsden join Swati Dhingra in voting for a rate cut. A 6-3 vote would surely be a big dovish surprise today and hit sterling," says Chris Turner, an analyst at ING.

At some point this summer, ING expects sterling to sell off, as the market accepts the Bank of England will follow the ECB/euro cycle rather than the Fed/dollar. "The question is whether BoE communication today triggers that adjustment or the adjustment happens in June," says Turner.

"We do not expect the recent data flow to prevent the BoE from delivering a more dovish policy signal this week indicating they are moving closer to cutting rates," says Derek Halpenny, Head of FX Research at MUFG Bank Ltd. "A more dovish BoE policy update poses downside risks for the pound in the week ahead."

However, Hardman says improving cyclical momentum for the UK economy and still supportive conditions for higher-yielding carry currencies should prevent a sharper sell-off for the GBP.

Shreyas Gopal, a strategist at Deutsche Bank, says a recent dovish repricing of the UK shorter-term bond yields over the past few sessions has left a cut by June half-priced.

Once the cut is fully priced, the selling can ease and we would not be surprised to see a "buy the fact" reaction by the Pound in the coming days.

Source: Poundsterlinglive

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Samantha Luan

Economic

Central Bank

As I sit down to discuss the recent events affecting Australia, I can't help but feel a sense of urgency and concern. The situation unfolding in our country demands our attention, and it's far from amusing. From economic instability to uncertain forecasts, there's a lot to unpack. So, let's delve into it together and shed some light on what's really going on Down Under.

Now, let's address the elephant in the room: the recent RBA rate decision. As anticipated, the rates were left unchanged, but what followed was nothing short of a disaster. The RBA's statements regarding inflation left much to be desired, with targets seeming more like wishful thinking than actionable goals. As someone deeply entrenched in the market, I can't help but feel alarmed by the lack of clarity and direction.

Inflation, a key economic indicator, remains stubbornly high, despite reassurances from the RBA. Their repeated claims of inflation decreasing ring hollow when real-world data tells a different story. It's like watching a horror movie unfold before our eyes, with uncertainty looming over every economic move.

One of the glaring issues is the disconnect between the RBA's actions and the reality on the ground. While they preach about blunting aggregate demand with higher rates, the evidence suggests otherwise. Excess demand persists, alongside skyrocketing domestic cost pressures, painting a bleak picture of our economic landscape.

And let's not even get started on the labor market. While the RBA talks about sustaining full employment, the reality is far from rosy. Uncertainty reigns supreme, with no clear path forward in sight. It's a game of economic roulette, and we're all holding our breath, waiting for the inevitable.

But amidst the chaos, there's a glimmer of hope. Despite the uncertainty, forecasts indicate a return to the target inflation range by the second half of 2025. While this may seem like a distant light at the end of a dark tunnel, it's something to hold onto amidst the storm.

So, where do we go from here? The answer isn't simple, but one thing is clear: we need decisive action. It's time for the RBA to step up and provide real solutions to real problems. We can't afford to continue down this path of uncertainty and ambiguity.

As I wrap up, I urge you to form your own opinions based on the information presented here. The Australian economy is at a crossroads, and your insights matter now more than ever.

Source: ACY

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Owen Li

Economic

Similar weakness has been seen in the days leading up to previous Bank of England decisions and speaks of investor nervousness of a Bank that has a tendency to err on the 'dovish' side. By this, we mean the Bank has often proven hesitant to raise interest rates when it needs to but is keen to cut rates at the first opportunity.

That first opportunity is coming closer, with the Bank of England's Governor and Deputy Governor recently giving speeches that raise the odds of a June interest rate cut.

"We still expect the European Central Bank and the Bank of England to lower rates in June," says Ben May, Director of Global Macro Research at Oxford Economics.

Although the market is fully priced for a June cut from the ECB, it only sees 50/50 odds of a similar move from the Bank of England; the Pound's recent weakness is a result of investors raising bets of such an eventuality.

Expect more losses tomorrow if market pricing moves more convincingly to the June start date, as a full repricing will demand a weaker Pound.

George Vessey, Senior FX Strategist at Convera says one-month euro-sterling risk reversals reached a fresh 6-month high amid bearish bets on the UK currency. "This means more traders are hedging against the risk of the pound depreciating against the euro as opposed to appreciating," he explains.

The Pound to Euro exchange rate fell a third of a per cent on Tuesday as investors prepare for such a dovish shift from the Bank that will include another member of the Monetary Policy Committee voting for a cut, while inflation forecasts will be lowered in the Monetary Policy Report.

The statement will also potentially hint that risks are now balanced to downside surprises in inflation and there could also be a clear reference to the next move being a cut.

Paul Spirgel, a Reuters market analyst, says the Thursday announcement "may upset the applecart for sterling bulls." Though Reuters polling indicates traders expect interest rates kept on hold, nine out of 29 analysts polled project a second vote on the MPC to cut rates.

"Should the BoE vote be interpreted as a dovish hold... the April 22 low is back in focus," says Spirgel.

However, MUFG's Hardman says improving cyclical momentum for the UK economy and still supportive conditions for higher-yielding carry currencies should prevent a sharper sell-off for the GBP.

Shreyas Gopal, a strategist at Deutsche Bank, says a recent dovish repricing of the UK shorter-term bond yields over the past few sessions has left a cut by June half-priced.

Once the cut is fully priced, the selling can ease and we would not be surprised to see a "buy the fact" reaction by the Pound in the coming days.

Weakness against the Euro is likely to be limited as the European Central Bank is fully expected to cut interest rates in June, with further cuts likely in the coming months. With the two central banks likely to follow a similar path any outsized moves in Pound-Euro can be faded.

Source: Pound Sterling

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Recent Searches

Top Searches

Markets

News

Analysis

User

24/7

Economic Calendar

Education

Data