Why the crypto market is following US stocks, what investors predict and what investors fear in April
US macroeconomic factors continue to affect the crypto market and bitcoin ($BTC ), particularly due to investors categorizing cryptocurrencies as risky assets. Experts from 10x Research attributed this to investors' anticipation of new U.S. trade duties, which are scheduled to be imposed starting April 2. In addition to the duties, analysts noted the impact of investors' concerns about rising inflation in the United States. Following this, 10x predicts a further drop in the bitcoin price below $80k.
“We now expect bitcoin to fall below $80k this week, especially given the numerous risk-aversion factors, which will likely put pressure on equities and affect the cryptocurrency market,” 10x wrote.
“President Trump's proposed duties, including a 25 percent levy on Mexican and Canadian goods effective April 2, have renewed fears of a trade war. Historically, such protectionist measures have caused risk aversion across all asset classes. And cryptocurrency has not been left out,” Ryan Lee, principal analyst at Bitget Research, told The Block.
After the price drop last week from the local maximum of $88.7 thousand, reached on March 24, the price of bitcoin for the second day in a row is in the trading range from $81.5 thousand to $83.5 thousand. The main decline in the price of bitcoin last week occurred from March 28 to 29, when quotes fell by almost 7%, below $82 thousand. Since March 24, the total capitalization of cryptocurrencies fell by about 6%, about 80% of tokens from the list of the top 100 lost in value up to 25%.
10x noted an increase in investor concerns about inflation in the US. They attributed this to the release of the Core Personal Consumption Expenditures (PCE) price index data released on March 28 (reflects changes in the prices of goods and services purchased by consumers for personal consumption), which pointed to rising inflation. PCE came in above expectations of 0.3% month-to-month - the February estimate was 0.4%.
According to experts, this is partly due to Trump's imposition of duties, which is “affecting consumer sentiment.”
“Annualized inflation expectations jumped to 5.0%, which negatively impacted risk assets. While Trump initially hinted at a measured approach to duties, his rhetoric has shifted toward a more aggressive stance,” the 10x report wrote.
However, not everyone is negative. Samer Hasn, senior market analyst at global asset broker XS.com, told CNBC that April will be a defining moment for the direction of markets in the coming months and, if a trade war can be avoided, “the market may have already bottomed out and we could see a significant recovery from the global downturn for both cryptocurrencies and stocks.”
Experts also pointed out the high correlation with the major stock indexes - the SP 500 and NASDAQ100, which track the prices of the largest U.S. stocks. The correlation value of bitcoin price with these indices is around 0.83 and 0.87 respectively.
“Timing turns out to be particularly important as digital assets remain highly correlated with traditional markets, suggesting that weakness in equities could continue to pull cryptocurrency prices down,” Lee added.
Experts also believe that positive momentum for bitcoin could come from additional actions by the U.S. administration regarding the bitcoin reserve.
“If Trump implements at least some of the expected initiatives by his 100th day in office, such as launching the first phase of the cryptocurrency reserve or legalizing some format of bitcoin settlement at the federal level, it could trigger a short-term boost in April, potentially pushing prices beyond $100k,” MEXC exchange chief operating officer Tracy Jin told CNBC, adding that if they continue to focus on duties and geopolitical threats, the effect could be the opposite.
