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  • Bitcoin posts consecutive record highs before retracing lower

  • Drops below 70,000 psychological mark amid rising US yields

  • Ethereum follows suit despite the successful Dencun upgrade

 

Bitcoin down around 10% from record highs

This week could be split into two different phases for Bitcoin and the crypto markets in general. Initially, the king of cryptos marched to consecutive all-time highs, peaking at $73,800 on Thursday. Again, intensifying investor demand towards spot-Bitcoin ETFs was the main catalyst, albeit there were no fresh developments in the sector that could justify four successive higher highs within four days.

However, Bitcoin closed in the red on Thursday, while on Friday the decline accelerated, with the price violating the $70,000 psychological region and dropping to as low as $65,560 at the time of writing. This pullback was mainly attributed to spiking US treasury yields and the strengthening dollar following a barrage of US data that pointed to persistent inflationary pressures.

The prospect of a looser monetary policy by the Fed has been a significant factor behind the rallies observed in risky assets, thus any macro evidence against this notion could easily trigger some losses. With Bitcoin at record highs, speculative traders might have seen this as the perfect opportunity for some profit taking, causing a deeper decline.

Moving forward, the broader picture does not change for Bitcoin with investor focus shifting on the impending halving event in late April and the much-anticipated regulatory approval of option trading on spot-Bitcoin ETFs. Although the impact of the former on Bitcoin prices could be more or less forecasted from its previous historical occurrences, the introduction of options in the spot-ETF market could create new cryptocurrency investment vehicles such as structured products and others.

Ethereum fails to capitalise on Dencun upgrade

On Wednesday, Ethereum’s Dencun upgrade was successfully launched, introducing a tool that reduces costs associated with transactions on layer 2 networks, which essentially gather and compress transactions before sending them to the primary blockchain network. Early indications suggest that the average cost of transactions has indeed dropped significantly, but the leading altcoin has failed to capitalise on the positive news.

Ethereum’s price has been undergoing a pullback in tandem with Bitcoin’s after repeatedly failing to surpass the $4,100 region despite the bullish developments on the idiosyncratic front. In contrast to Bitcoin, Ethereum has not yet reached its record highs from 2021, while the increasing speculation around the regulatory approval of spot-Ethereum ETFs in the upcoming months seems to be providing significant upside potential.

Temporary pullback or beginning of a correction?

This has been a roller coaster week for BTCUSD, with the price surging to successive all-time highs before shedding around 10% in the past two days. The question that lies ahead is whether this is just a healthy setback before the broader uptrend resumes or the beginning of a sustained correction.Should the bearish pressures persist, the price might test Friday’s bottom of $65,564. Failing to halt there, Bitcoin could slide towards the March support of $59,313.

Alternatively, bullish actions could propel the price towards the crucial $70,000 mark ahead of the all time high of $73,800 registered on Thursday.