BTC slides further below $60,000 after an eye-opening week

At the time of writing, Bitcoin is struggling to reclaim the $60,000 mark at the start of May after an April slide reminiscent of November 2022. Bitcoin’s tough week has dealt another eye-opening blow to the notion that the cryptocurrency could play the role of “digital gold” - with analysts noting that Bitcoin has more of a correlation with traditional markets than it has with Gold.

With the Fed’s May day ‘higher for longer’ monetary policy outlook, the Nasdaq slid by 2% for the day, while the S&P 500 fell by 1.6% - as the US economy remains robust despite protracted tight monetary conditions. According to Zach Pandl, head of research at Grayscale investments,  interest rates remaining higher for longer will continue supporting the dollar and take away more bets from assets like Bitcoin.

Bitcoin’s cause was also not helped by a halving event that did not faze miners and in hindsight appears to have been priced-in during its last peak. Hong-Kong’ tepid response to the much publicized spot-Bitcoin ETFs launch, was another flop that capped a week that also saw large capital outflows from US Bitcoin ETFs.

On a positive note, analysts expect the spot-Bitcoin ETFs to grow on Chinese investors despite a poor first-day showing. ChinaAMC’s Bitcoin product is already among the top 20% largest ETFs, noted Bloomberg’s senior ETF analyst Eric Balchunas - after it gathered over $123 million in assets in its first trading session.

Bitcoin’s potential short-term floor

Source: Deriv MT5

Despite April’s slump, Bitcoin remains in buy territory on the weekly chart, which could see some buyers make discount buys. A continued slump could see potential takers at the lower $50,000 region, but further weakening could see more sell offs that would potentially push prices towards the $42,000 support level.

This is a price to watch especially after JPMorgan analysts predicted a post-halving slump towards that level. Technicals hint at a weakening bullish move with the RSI dropping steeply and prices touching the lower Bollinger band.

If interest in Hong-Kong spot-Bitcoin ETFs grows, it could offset the hemorrhaging seen with US spot-Bitcoin ETFs and potentially keep prices within the $55,000 to $64,000 price range.