Ash Crypto, a well-known cryptocurrency analyst, has highlighted three key factors that could contribute to Bitcoin (BTC) experiencing a period of sideways trading in the coming weeks. Despite the recent rally that propelled the world’s largest cryptocurrency from $32,000 to $73,000, certain market dynamics suggest a potential pause or consolidation phase.
- Spot ETF Buying Momentum The recent surge in Bitcoin’s price has been largely attributed to the launch of spot Bitcoin Exchange-Traded Funds (ETFs), which have fueled significant buying pressure. However, Ash Crypto notes that if major ETF providers like ARK Investment Management (ARKB), BlackRock, and Fidelity slow down their buying or start selling, it could lead to a temporary loss of upward momentum. Yesterday, ARKB, the third-largest buyer among spot ETF providers, recorded an outflow of $87 million, potentially signaling a shift in sentiment.
- Potential Delay in Ethereum Spot ETFs The cryptocurrency community is eagerly awaiting the approval of spot Ethereum ETFs, expected in May. However, Ash Crypto warns that a delay by the U.S. Securities and Exchange Commission (SEC) in approving these products could dampen market enthusiasm and contribute to sideways trading. The significance of Ethereum spot ETFs lies in their potential to attract institutional capital and drive further adoption of the second-largest cryptocurrency.
- Federal Reserve’s Rate Hike Decision The Federal Reserve’s upcoming meetings in May and June will be closely watched by market participants, as expectations are high for the first rate cut in June. If the Fed decides to delay the rate cut, it could create short-term panic and volatility in the crypto market, potentially leading to a sideways movement. Central bank policy decisions have historically had a significant impact on risk-on assets, including cryptocurrencies.
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Show more +Despite these potential headwinds, Ash Crypto remains optimistic about the long-term prospects of the crypto market. Drawing parallels with the correction charts of the 2017 and 2021 cycles, the analyst suggests that the market will eventually settle the volatility within one to two months and resume its upward trajectory.
It’s worth noting that market corrections and periods of consolidation are common occurrences in the highly volatile cryptocurrency space. These phases often provide opportunities for investors to reassess their positions and for the market to establish stronger support levels before the next leg of a potential rally.
Factors like institutional adoption, regulatory developments, and macroeconomic conditions will continue to play an increasingly crucial role in shaping market dynamics. Investors are advised to remain vigilant and adapt their strategies accordingly, as the crypto landscape continues to evolve rapidly.
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