Bitcoin Set to Become More Dominant Even as BTC Stares at First Monthly Loss Since August

I’ve been closely monitoring the cryptocurrency market, and as I write this, bitcoin is being exchanged at a price of $63,200. This marks an 11% decrease in value compared to the start of the month – the first such decline since August 2023, based on data from CoinDesk and TradingView. The CoinDesk 20 Index, which measures the performance of the most liquid digital assets, has experienced a nearly 20% decrease in value for the month, settling at 2,185 points.

As an analyst, I’ve identified several key factors that have contributed to the recent deflation of Bitcoin’s bull market. The Fed’s decreasing likelihood of interest rate cuts, waning demand for U.S.-listed spot Bitcoin ETFs, and pervasive risk aversion in financial markets have collectively sapped momentum from the cryptocurrency’s price surge this month. On the other hand, the ongoing expansion of prominent stablecoins has served as a stabilizing influence during this period.

As an analyst, I’m keeping a close eye on the upcoming quarterly refunding statement from the U.S. Treasury set for release on Wednesday. Based on insights from QCP Capital, a finance firm headquartered in Singapore, an increase in the issuance of short-term bills could lead to enhanced liquidity within financial markets. This added liquidity may bolster investor confidence and potentially benefit risk assets.

In an recent market report, QCP predicted that the Quarterly Refunding Announcement (QRA) scheduled for May 1 could lead to greater production of short-term American treasury bills. This anticipated surge could deplete the Reverse Repurchase Agreement (RRP), which currently holds approximately $400 billion, and simultaneously boost market liquidity.

The U.S. Treasury announced on Monday its intention to increase borrowing during the April through June period. This unexpected larger debt issuance could lead to a surge in government bond supply, resulting in higher interest rates or risk-free yields, and subsequently, reducing the appeal of investing in riskier assets.

The Treasury projects that it will have approximately $850 billion in its General Account by late September, which is a bit more than the previously anticipated $750 billion.

The percentage representation of Bitcoin in the cryptocurrency market reached a three-year peak of 57% in the recent past, surpassing a six-month long plateau.

As a researcher studying the cryptocurrency market, I’ve noticed an intriguing trend – Bitcoin’s recent surge in value and popularity may set it apart from other digital currencies, or altcoins, for the foreseeable future.

As a crypto investor, I’ve noticed recently that Bitcoin’s dominance rate experienced a notable surge, outperforming altcoins in the intermediate-term. This trend aligns with my weeklyRelative Rotation Graph (RRG) analysis, where most altcoins show a downward trajectory.

As a researcher studying the cryptocurrency market, I would describe it this way: “The recent surge in the index signifies an extension of the ongoing recovery trend, which has largely offset the significant altcoin price increases observed during the early stages of 2021.”