The cryptocurrency market showed a slight recovery on April 1 as investors took advantage of lower prices following a challenging quarter in which Bitcoin and Ethereum experienced declines of 12% and 45%, respectively.
Bitcoin (BTC) price increased marginally to $84,000, while altcoins such as Pepe (PEPE), EOS (EOS), Bonk (BONK), and Farcoin (FARTCOIN) saw gains of over 5% in the last 24 hours. Total trading volume across exchanges surged by 18%.
This rebound is noteworthy, especially as U.S. stock index futures continued their downward trajectory. Futures tied to the Dow Jones dropped by 250 points, with both the Nasdaq 100 and S&P 500 indices declining by 0.50%.
A contributing factor to the performance of Bitcoin and other altcoins could be the decreasing balances of BTC and ETH on exchanges, indicating a potential easing of selling pressure.
Recent data shows that there are currently 2.2 million BTC on exchanges, down from 2.25 million in March. ETH balances have also decreased to 14.5 million, marking the lowest level in years.
Possible Risks Ahead for Bitcoin and Altcoins
While the current rebound is promising, it could also reflect a dead cat bounce, as market risks remain significant. A dead cat bounce occurs when an asset experiences a temporary upswing before continuing its downward trend, often referred to as a bull trap.
The argument for this being a dead cat bounce is supported by several potential risks on the horizon. A key concern is Donald Trump’s upcoming Liberation Day on Wednesday, during which he is expected to announce sweeping tariffs aimed at funding tax cuts and enhancing U.S. manufacturing.
This move could provoke responses from other nations, particularly in the European Union, leading to retaliatory tariffs. Such developments could ignite a trade war, exacerbate inflation, and potentially compel the Federal Reserve to postpone its planned interest rate cuts.
Technical Analysis Indicates Potential Downward Movement
Another reason to consider the current BTC and altcoin rebound as a possible dead cat bounce is reflected in technical analysis. Current charts indicate that Bitcoin is still exhibiting bearish signals, remaining below the 50-day moving average and suggesting continued bearish control.
Bitcoin has also fallen beneath the critical resistance level of $89,156, which aligns with the neckline of a double-top pattern at $108,410. Following a break-and-retest pattern, a brief retest of that neckline has occurred.
Given this analysis, there is a significant possibility that Bitcoin may return to its downtrend, potentially revisiting last month’s low of $76,485. The bearish sentiment will likely persist as long as prices remain below the resistance level at $95,000.
If this scenario unfolds, altcoins including Pepe, EOS, Bonk, and Farcoin may also continue their downward trajectory.
