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⚡Bitcoin Dips to $66K Amidst Altcoin Slump🍕

Croxroad

14 Apr 2024 — 4 min read

☕️ GM Dear Plebs!

Here is Crox Road, your daily dose of orange pill that will turn you into a Bitcoin Maxi.

The menu for today:

🫠 Cryptocurrency Meltdown

Cryptocurrencies experienced a sharp decline on Friday as risk-off sentiment permeated traditional markets, casting a shadow over digital assets amid heightened geopolitical tensions. Bitcoin, the leading cryptocurrency, witnessed a rapid downward spiral during U.S. trading hours, plummeting below the $66,000 mark after briefly flirting with $71,000 earlier in the day. At the time of reporting, bitcoin had managed to recover slightly to $66,700, marking a significant 5% drop over the past 24 hours.

Ether, the second-largest cryptocurrency by market capitalization, mirrored bitcoin's downturn, plunging as much as 12% to $3,100 before staging a modest recovery to trim losses to 8%. The broader cryptocurrency market was not spared, with the CoinDesk 20 Index (CD20) witnessing a nearly 10% decline. Altcoins such as Cardano's ADA, Avalanche's AVAX, bitcoin cash (BCH), filecoin (FIL), and aptos (APT) bore the brunt of the sell-off, facing losses ranging from 15% to 20%.

The sharp drawdown triggered the largest leverage washout in a month, with approximately $850 million worth of leveraged derivatives trading positions liquidated across all digital assets, according to CoinGlass data. Of these positions, around $770 million were long positions, caught off guard by the sudden downturn. The cryptocurrency market's downturn coincided with a broader sell-off in traditional markets, as escalating tensions in the Middle East rattled investors. Amid fears of a widening conflict, U.S. stock markets stumbled, while safe-haven assets like Treasury bonds and the U.S. dollar index (DXY) surged. Gold reached a new all-time high above $2,400 before retracing its gains, while oil prices saw a modest uptick. Looking ahead, Ryze Labs cautioned of potential "short-term market softness" for crypto assets due to the upcoming tax season but maintained a positive long-term outlook, anticipating relief as policymakers adjust monetary policy.

📤 Altcoins Feel the Pinch

Bitcoin (BTC) has been locked in a tight trading range following its record-setting peak of $73,949 on March 14. While Bitcoin's stability may seem reassuring, not all altcoins are sharing the same strength, with some faltering amid BTC's lacklustre performance. This consolidation phase, however, could be the prelude to a significant volatile move that may prove detrimental to altcoins.

The connection between cryptocurrency markets and macroeconomic events has been a topic of interest, particularly given Bitcoin's sensitivity to such factors in recent years. While this correlation seemed to fade at the beginning of 2023, recent developments in the macroeconomic landscape are once again influencing market sentiment. Surprising upside in jobs data, coupled with higher-than-expected inflation rates, suggests that inflation remains a concern, albeit not at the levels seen in 2023. These data points have impacted expectations for future rate cuts, with the CME FedWatch Tool indicating a shift in the anticipated timing from June to September, with a 45.7% probability of a 25 basis point rate cut in September.

The prospect of higher interest rates for an extended period could potentially dampen the altcoin rally, mirroring the effect seen in traditional markets where capital tends to move from riskier assets to safer options during such times. This shift could favor relatively stable cryptocurrencies like Bitcoin and Ethereum over riskier altcoins. Additionally, rising Bitcoin dominance further reinforces this assumption, as altcoins have shown weakness in recent weeks, with BTC dominance poised to climb further to around 56.62%. As the fourth Bitcoin halving approaches, historically, altcoins have tended to lose momentum and correct, suggesting that capital rotation may drain liquidity from altcoins and flow into Bitcoin, amplifying its dominance in the market.

6️⃣ Do You Have to Report Crypto Under $600?

If your yearly income, including cryptocurrency, falls below the minimum filing requirements for your tax status, you're not obligated to file or report it. But consider filing anyway, as you could qualify for a refund. If your income surpasses these requirements, you're required to report both your cryptocurrency holdings and any associated capital gains or losses.