Key Points:
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The US GDP shrank by 0.3% in Q1, heightening recession concerns and prompting discussions about potential Federal Reserve rate cuts.
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Bitcoin’s price fell to $92,910 following the GDP announcement, although persistent buy-side demand may provide necessary support.
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The current derisking in the crypto market appears to be temporary, as the underlying market fundamentals remain strong.
Bitcoin (BTC) experienced a sudden downturn as newly released data revealed a 0.3% contraction in the US gross domestic product (GDP) for the first quarter, raising alarms among economists forecasting a looming recession. In reaction to the news, the price of Bitcoin dropped to an intra-day low of $92,910, paralleling declines in the DOW and S&P 500, which fell by 1% and 1.3%, respectively.
Despite the alarming nature of the GDP figures, CNBC reported that the decline was largely attributed to a “surge in imports ahead of President Donald Trump’s tariffs.” Since imports detract directly from GDP calculations, this suggests that the retraction may be more of a temporary setback rather than a systemic issue.
Following the initial decline, Bitcoin rebounded to the $94,000 range as both cryptocurrency and traditional markets digested the latest economic information. Apart from the GDP report, Bitcoin is currently bolstered by several positive indicators that may sustain demand within its current pricing tier.
Resistance levels at $95,000 remain significant, yet Bitcoin is establishing a sequence of daily higher lows. Additionally, the resistance range between $95,500 and $96,400 aligns with the 61.8% Fibonacci retracement level, often regarded as a classic resistance point in technical analysis.
In the face of today’s substantial spike in Bitcoin long liquidations, reaching approximately $41.47 million, spot trading volumes have primarily driven the recent BTC bullish momentum over the last two weeks—another encouraging sign.
Related: Bitcoin macro indicator that predicted 2022 bottom flashes ‘buy signal’
Support for Bitcoin Price Demand from Various Angles
During the last fortnight, the Bitcoin market has witnessed:
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Spot Bitcoin ETF inflows totaling $3.02 billion as of April 29, with BlackRock’s IBIT leading the charge.
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A statement from the US Federal Reserve Board of Governors allowing banks to independently offer crypto-based products and services as of April 24.
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Investment banking firm Cantor Fitzgerald has partnered with SoftBank, Tether, and Bitfinex to establish a $3 billion Bitcoin acquisition company called 21 Capital.
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A notable $1.42 billion Bitcoin purchase from Strategy.
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Coinbase’s institutional head of strategy John D’Agostino noted that sovereign entities were active buyers during the sell-off below $75,000.
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A growing number of international companies adopting the “MicroStrategy playbook” are increasingly diversifying into Bitcoin treasury holdings.
In conclusion, while the decline in US GDP has led to a headline-driven correction in Bitcoin’s price, sustained buy-side demand and robust market fundamentals are likely to mitigate the impact of this brief downturn.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
