Article reprinted from: BitPush
Pre-halving volatility continued to dominate the cryptocurrency market on Tuesday, with investors taking a wait-and-see approach ahead of tomorrow’s U.S. Consumer Price Index (CPI) report. BTC turned negative after yesterday’s surge, falling below $69,000 at one point, and altcoins were hit hard.
U.S. stocks were sluggish for most of the session, but by the close of the day, the S&P and Nasdaq escaped negative territory, rising 0.14% and 0.32% respectively, while the Dow closed flat.
Bitpush terminal data shows that Bitcoin has been on a downward trend since it hit a peak of $72,800 on Monday, hitting an intraday low of $68,200 before rebounding above $69,000. As of press time, BTC is trading at $69,118, down 3.57% in 24 hours.
The altcoin market was hit hard by Bitcoin’s pullback, with only 10 of the top 200 tokens up more than 2%, with Theta Fuel (TFUEL) leading the gains, up 24.5%, followed by Saga (SAGA) up 10.4%, and MX Token (MX) up 9.4%. Meme coin Dogwifhat (WIF) was the biggest loser, down 14.9%, while Arkham (ARKM) fell 13.9% and Wormhole (W) fell 13.5%.
Regulatory trends disrupt the crypto market
On the same day, U.S. Treasury Deputy Secretary Wally Adeyemo claimed in testimony to the Senate Banking, Housing and Urban Affairs Committee that more and more malicious actors are using virtual currencies to circumvent economic sanctions and that the Treasury Department needs to expand its powers to effectively combat illegal crypto financing.
He said the main problem is that the use of cryptocurrencies and decentralized finance (DeFi) allows bad actors to "hide their identities and use virtual currencies to transfer resources," and despite the Treasury's best efforts, "malicious actors" are still "seeking new ways to transfer resources," such as crypto mixers or over-the-counter digital asset exchanges.
For these reasons, Adeyemo called for the creation of “a law enforcement regime capable of preventing this activity as terrorists, transnational criminals, and rogue states increasingly turn to digital assets.”
The crypto market's losses widened after the comments were made, as U.S. regulatory developments remain one of the key factors affecting the market.
VeChain founder Sunny Lu believes that changing regulations will affect Bitcoin’s trajectory after the upcoming halving event, saying in an interview: “If we compare this cycle to the previous one, the impact of regulation becomes obvious.”
Sunny Lu said that now investors’ attention has shifted from the traditional understanding of the impact of halving based solely on supply dynamics to a broader consideration of macroeconomic factors. He said: “The mathematical principle of halving is becoming less and less, and halving will essentially lead to price increases due to supply reduction, and more about the impact of macro forces.”
Expected volatility
The futures market currently predicts a 57% chance that the Fed will cut interest rates in June and a 74% chance that it will cut interest rates in July.
“The recent macro environment in the US has been like a pendulum, constantly oscillating between hopes for a ‘Goldilocks scenario’ of a perfect soft landing and concerns that inflation will pick up again and force a more hawkish monetary policy, and market sentiment seems to be swinging a bit in the bearish direction at the moment,” said market analyst Bloodgood in his latest update. “In any case, all eyes are on tomorrow’s CPI release, with a consensus forecast of 3.5%, and given market concerns that the Fed may take a dovish signal too early – although it is unclear when it will eventually cut rates – any surprise in terms of higher-than-expected inflation will have an impact on the market.”
Bloodgood warned investors that while Bitcoin “successfully closed above a key level” last week, it has “seen a lot of indecision recently as both bulls and bears have been unable to follow through on breakouts in either direction,” and he advised investors to exercise caution, especially if “there are any open leveraged positions.”
Bloodgood noted: “Other than BTC reclaiming the $70K level, not much has changed. The timing is uncertain as we are about to have a BTC halving right after setting a new ATH — that’s not how cycles usually work — so we are definitely in uncharted territory.”
Michaël van de Poppe, founder of MN Trading, said on the X platform that in the short term, Bitcoin may trade sideways and consolidate until sometime after the halving.
The overall cryptocurrency market cap is currently $2.6 trillion, with Bitcoin’s dominance rate at 52.3%.
