BIT Research: Why Is Bitcoin "Unmoved" Despite Favorable News Landing?
- Core View: The current crypto market shows a dulled response to macro news. Despite a technical rebound, constrained by previous massive losses, slow capital inflows, and macro uncertainties, the market overall remains in a cautious wait-and-see phase, with no confirmed trend reversal yet.
- Key Factors:
- Dulled Market Reaction: News such as ceasefires and inflation expectations failed to trigger significant market volatility. Bitcoin rebounded 6.5%, but trading volume did not increase correspondingly, indicating weak momentum.
- Weak Capital Inflow Willingness: Current daily trading volume (approximately $121 billion) is far below last year's peak. Furthermore, the crypto market has retreated 43% from its high, with cumulative losses of about $1.86 trillion, suppressing the willingness to increase positions.
- Technical Repair Emerges: Bitcoin has entered an oversold zone. Weekly stochastic indicators and monthly RSI show signs of bottom formation. However, history (e.g., 2022) indicates oversold conditions can persist, which alone is insufficient to confirm a reversal.
- Macro Constraints Persist: The market expects US inflation may rise to 3.4%, and oil prices remain high. These factors may continue to suppress risk appetite for high-volatility assets.
- Key Observation Level: $70,000 has become a critical dividing line. Bitcoin needs to close effectively above this level in April for market sentiment to potentially shift from focusing on downside risks to considering upside potential.
The current crypto market is in a phase of significantly muted reactions. News of a ceasefire, rising inflation pressure expectations, and increasing anticipation of a change in the Federal Reserve Chair should have driven more pronounced market volatility, yet Bitcoin's overall response remains relatively limited. Although the price rebounded from $66,400 to $70,900, a gain of approximately 6.5%, trading volume and market participation did not expand in tandem, indicating that market momentum remains insufficient. Meanwhile, the cumulative losses in the crypto market are still substantial, willingness to re-enter positions is weak, and the market as a whole remains in a phase of watchful waiting and seeking validation.
Weak Rebound Momentum: Easing Newsflow Fails to Drive Significant Capital Inflows
Judging from market performance, while the ceasefire news provided a short-term respite, it did not reverse the overall weak trend. The trading volume on the day the ceasefire news was announced was about $121 billion, less than one-third of the peak of $394 billion seen in October last year. Considering the current total crypto market capitalization of approximately $2.42 trillion, this level of trading volume does not reflect strong willingness to enter the market.
At the same time, crypto asset portfolios have retraced 43% from their highs in October last year, corresponding to losses of about $1.86 trillion. In contrast, traditional markets have seen limited retracements, and the pressure from losses in the crypto market still needs time to be digested. Against this backdrop, the market has not quickly restored risk appetite in response to easing geopolitical news, reflecting that capital remains cautious towards the current market conditions.
Technical Indicators Show Signs of Recovery: But Macro Constraints Still Limit Trend Reversal
From a technical perspective, Bitcoin has entered a clearly oversold zone, with some indicators beginning to show marginal recovery. The weekly Stochastic Oscillator is approaching the critical threshold of 20%, and the monthly RSI is also starting to show signs of bottom formation, suggesting that market momentum may be changing.
However, similar oversold conditions persisted for months in 2022. Although rebound signals appeared during that period, they ultimately did not form an effective reversal. Therefore, the current improvement in technicals is still insufficient on its own to constitute a basis for a trend reversal. On the other hand, the market widely expects US inflation to rise from 2.4% to 3.4%. If the data falls within the expected range, the Fed is highly likely to remain on hold. Additionally, high oil prices and the transmission of energy costs to the consumer end may continue to suppress risk appetite for high-volatility assets.
Overall, the market remains in a cautiously bearish phase. Although technical indicators show some signs of recovery and fundamental logic also supports Bitcoin, large-scale losses have not been fully digested, capital inflows remain slow, and macro and geopolitical uncertainties persist. In this context, $70,000 has become a key dividing line. If Bitcoin can effectively hold above this level by the April close, the market may shift from downside risks to upside potential. Until then, remaining watchful is preferable to prematurely betting on a reversal.
Some of the above viewpoints are from BIT on Target. Contact us to obtain the full BIT on Target report.
Disclaimer: The market carries risks, and investment requires caution. This article does not constitute investment advice. Digital asset trading can carry significant risks and volatility. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. BIT is not responsible for any investment decisions based on the information provided in this content.
