On April 1, the cryptocurrency market experienced a modest recovery as investors seized the opportunity to buy following a punishing quarter in which Bitcoin and Ethereum saw declines of 12% and 45%, respectively.
The price of Bitcoin (BTC) climbed slightly to $84,000, while Pepe (PEPE), EOS (EOS), Bonk (BONK), and Farcoin (FARTCOIN) each rebounded by over 5% within the last 24 hours. Additionally, total trading volume across exchanges surged by 18%.
This comeback was particularly noteworthy as U.S. stock index futures continued to trend downward. Futures associated with the Dow Jones fell by 250 points, with the Nasdaq 100 and S&P 500 indices both dropping by 0.50%.
A potential driver behind the recent performance of Bitcoin and various altcoins is the data indicating that BTC and ETH reserves on exchanges have decreased, suggesting that selling pressure might be easing.
According to recent data, the number of BTC on exchanges has dropped to 2.2 million, down from 2.25 million in March. Meanwhile, ETH balances have fallen to 14.5 million, the lowest in several years.
BTC and altcoin recovery might be a temporary bounce
The recent recovery could also be seen as a temporary bounce in a bearish market, with risks still quite elevated. A “dead cat bounce” describes a scenario where an asset on a downward trend experiences a brief rally before continuing to fall, often referred to as a bull trap.
The argument for this being a dead cat bounce is strengthened by several impending risks. Prominently, there is Donald Trump’s upcoming Liberation Day on Wednesday, when he is expected to announce significant tariffs aimed at generating funds for tax cuts and promoting U.S. manufacturing.
Other nations, particularly within the European Union, have indicated that they would retaliate with counter-tariffs. Such actions could incite a trade war and push inflation higher, possibly leading the Federal Reserve to postpone its anticipated interest rate cuts.
Technical indicators for Bitcoin suggest further decline
Another reason to consider the current BTC and altcoin rebound as a potential dead cat bounce lies within technical analysis. The accompanying chart indicates that Bitcoin continues to show bearish signals, remaining below the 50-day moving average, which suggests that bearish sentiment is prevailing.
Bitcoin has also dipped beneath a crucial resistance level at $89,156, which is associated with the neckline of a double-top pattern at $108,410. It has recently completed a break-and-retest pattern by briefly testing that neckline.
Consequently, there is a strong possibility that Bitcoin will re-enter its downtrend and potentially revisit last month’s low of $76,485. The bearish sentiment will persist as long as the price remains below the resistance level of $95,000.
If this scenario unfolds, it’s likely that altcoins such as Pepe, EOS, Bonk, and Fartcoin will also continue their downward momentum.