The pre-halving weakness continued to affect the price trend of the cryptocurrency market on Wednesday, with Bitcoin facing significant downward pressure.

According to Bitpush Terminal data, after reaching a high near $65,540 in the early hours of the Eastern time zone, Bitcoin declined throughout the trading day, reaching a low of $59,640 (an 18% drop from its peak in March), and then rebounding slightly to above $60,000. At the time of writing, the trading price was $61,434, with a 3.1% decrease over 24 hours.

The altcoin market experienced pressure and a mixed performance earlier in the day, with the top 200 tokens showing both gains and losses. Among them, Injective (INJ) led the gains, rising by 14.8% to $27.93, Book of Meme (BOME) rose by 14.2%, and Sui (SUI) rose by 12.3%. Mantra (OM) experienced the largest decline, falling by 11.4%, followed by Saga (SAGA) with a 10.1% decrease, and Echelon Prime (PRIME) with a 9.4% decrease.

The current total market value of cryptocurrencies is $2.24 trillion, with Bitcoin's dominance at 53.6%.

Due to the uncertainty of the timing of interest rate cuts and the risk brought to the market by the Middle East conflict, the U.S. stock market opened high and closed low. This hesitation to increase exposure to risky assets further contributed to the weakness. At the close, the S&P, Dow Jones, and Nasdaq indices all fell by 0.58%, 0.12%, and 1.15% respectively.

Have institutional investors paused buying Bitcoin?

Analysts at Stockmoney Lizards stated in a post that Bitcoin's further downward trend aligns with the Wyckoff analysis method.

As shown in the following chart, Bitcoin's recent price movements resemble the trends typically seen in the formation process of the Wyckoff distribution model. As of April 17th, BTC has entered the "signs of weakness" stage of this pattern.

This stage indicates a weakening demand, which in turn leads to a decline in assets. StockMoney Lizards believes that, in the case of Bitcoin, the insufficient demand is due to the Federal Reserve's long-standing high-interest rate policy and the escalating conflict between Iran and Israel, leading to increasing risk aversion.

The analysts stated, "Large institutions have currently paused buying," and added, "The inflow of ETFs is at an unprecedented low. Our guess is: they feel that a difficult period for the market may be coming."

Data from Farside Investors shows that since the outbreak of the Iran-Israel conflict on April 12th, nearly $150 million has flowed out of U.S. spot Bitcoin ETFs.

Stronger Dollar = Weaker Crypto

Amid the weakness in Bitcoin and the broader financial markets, the U.S. dollar has experienced its best five-day gain since February, rising by over 2% since April 10th. At the time of writing, the DXY trading price is 106.23, the highest level since November 2nd.

Historically, higher interest rates lead investors to seek higher returns by buying U.S. Treasury bonds and fixed deposits, thereby increasing demand for the dollar, reflected in the recent rise of the DXY index.

Market analyst Bitcoin Schmitcoin pointed out on X platform that the DXY index moves inversely to the crypto market.

He stated, "Crypto bull market = DXY bear market; Crypto bear market = DXY bull market; Crypto market top = DXY bottom; Crypto market bottom = DXY top. Although DXY is consolidating, it is an indicator of crypto/stock market volatility."

This raises the question: Will the halving become a selling news event?

Bitcoin Schmitcoin expressed, "We see major stock markets potentially forming a top, and after clearing a decade-long consolidation, the U.S. dollar gold is showing tremendous strength. All of this suggests that we are starting to see investors turn to hedging mechanisms to deal with macro uncertainty. The breakout of DXY is because people are seeking cash rather than assets. People buy gold because they are hedging. This is not a good sign, although I really want to be bullish on BTC, I find it really hard to stay in the bullish camp. Remember my words: if the U.S. dollar index starts to rise, everything else will fall as a result."

Bitcoin halving price reaction may not occur immediately

With only two days left until the Bitcoin halving in 2024, cautious investors are choosing to adopt a wait-and-see attitude regarding whether BTC prices will retreat again or rebound significantly.

Rikke Staer, CEO of Coinify, stated in a report that the price reaction to the upcoming halving of Bitcoin may take several months, and replicating the significant percentage increases observed in the past may be challenging.

He said, "Price reactions usually do not occur immediately. Historically, the major growth after halving has occurred within 6-18 months, and with the expansion of the market size, statistically, larger price fluctuations become less likely."

Staer added that due to the current differences in the size and liquidity of the Bitcoin market compared to the past, replicating the huge percentage gains observed in previous halvings may be difficult.

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