Bitcoin Price Plunges to Worst Q1 Since 2018: 5 Crucial Things to Know

Buckle up, crypto enthusiasts! Bitcoin just wrapped up its roughest first quarter since 2018, leaving many wondering what’s next. While gold shines brighter and looming US trade tariffs cast shadows, the crypto market is bracing for potential turbulence. Is this just a temporary dip, or are we heading into a deeper chill? Let’s dive into the five crucial things you need to know about Bitcoin price movements this week.

1. Bearish Engulfing: What’s Weighing Down the BTC Price?

Bitcoin traders are on edge as we kick off a new week, and for good reason. The combination of monthly and quarterly candle closes coinciding with fresh US trade tariffs is creating a volatile cocktail for risk assets. Many market participants are nervously watching as the BTC price flirts with the $80,000 mark, a level not seen in about two weeks. Data from Crypto News Insights Markets Pro and TradingView confirm that the March 30 weekly close dipped to around $81,200.

One popular trader, CrypNuevo, pointed out a recent ‘wick to the downside’ on lower timeframes, suggesting potential for further drops. Another trading account, HTL-NL, highlighted a concerning ‘bearish engulfing’ candle on the weekly chart, indicating a possible shift in momentum. The longer-term picture isn’t much rosier either. Bitcoin and US stocks are facing potential ‘death crosses,’ signaling short-term losses catching up to the broader uptrend. However, some analysts are questioning if these ‘death crosses’ might actually mark market bottoms, as seen in previous instances.

2. US Trade Tariffs: The ‘Liberation Day’ Wildcard for Crypto

Adding to the market jitters is the looming specter of new US trade tariffs, set to commence on April 2nd – a date dubbed ‘Liberation Day’ by former President Trump. Market analysis indicates that crypto assets are particularly sensitive to trade tariff news. Uncertainty reigns as the exact scope and impact of these measures remain unclear. Trading resource The Kobeissi Letter highlights that these tariffs could affect a staggering $1.5 trillion worth of US imports by the end of April. They believe April 2nd could represent the most significant escalation in the ongoing trade war, injecting substantial volatility into the markets. The Economic Policy Uncertainty Index is currently elevated, reflecting the widespread unease.

Adding fuel to the fire, Federal Reserve Chair Powell is scheduled to speak on the economic outlook on April 4th. While he previously downplayed the direct link between tariffs and inflation, he also signaled no rush to lower interest rates – a key factor watched closely by risk-asset traders. Current expectations from CME Group’s FedWatch Tool still point towards a potential rate cut at the Fed’s June meeting, but the tariff situation adds a layer of complexity and unpredictability.

3. Q1 2024: Bitcoin’s Worst Start Since 2018 – A Stark Reality Check

As the first quarter of 2024 concludes, the numbers paint a sobering picture for Bitcoin. Data from CoinGlass reveals a 12.7% drop in BTC price during Q1, marking its worst first-quarter performance since 2018. This lackluster performance is further emphasized by gold’s outperformance as a safe-haven asset, reaching all-time highs while Bitcoin retreated 30% from its January peak.

However, it’s important to keep this correction in perspective. Historical data from Glassnode shows that previous bull markets have experienced maximum drawdowns exceeding 60%. In fact, this cycle has been noted as the least volatile compared to previous ones. Trader Daan Crypto Trades summarized the quarter as ‘overall not horrible,’ acknowledging the challenging macroeconomic environment but highlighting Bitcoin’s relative resilience. On a monthly basis, March saw a modest 2.7% loss, making it a fairly typical third month of the year.

4. MVRV Ratio: Is a Definitive Bottom in Sight for the Crypto Market?

The Market Value to Realized Value (MVRV) ratio, a key indicator for crypto market sentiment, continues to flash warning signs. This metric compares market cap to realized cap to gauge short-term and long-term profitability. In early March, the MVRV ratio experienced a ‘death cross,’ with its short-term moving average dipping below the long-term average. This event, as noted by CryptoQuant contributor Yonsei Dent, historically precedes price declines after Bitcoin reaches a local peak, underscoring the MVRV’s reliability as a sentiment indicator.

Currently, the MVRV is converging towards its long-term historical average, suggesting the market has moved out of an ‘overheated’ state. However, crucially, Dent emphasizes that ‘no definitive bottom signal has emerged yet.’ While the current market behavior mirrors past cycles, caution regarding potential further downside risk remains prudent. Despite this short-term uncertainty, previous analysis based on MVRV data still suggests Bitcoin has room for fresh all-time highs in the longer timeframe.

5. Coinbase Premium: A Glimmer of Hope Amidst the Dip?

The Coinbase Premium, which reflects the price difference between Coinbase’s BTC/USD pair and Binance’s BTC/USDT pair, has shown a slow return this quarter. Recent market behavior has been characterized by episodes of panic selling. Currently hovering around neutral, the Premium’s resilience amidst BTC price pressure is noteworthy. CryptoQuant contributor Crypto Sunmoon points out that ‘panic selling is decreasing,’ based on the Premium’s behavior.

A positive Coinbase Premium typically signals increasing US investor confidence and a willingness to add BTC exposure, a vital component of sustainable Bitcoin bull markets. Its resistance to further decline in the face of falling prices leads Sumoon to speculate about a ‘possible trend reversal.’ While not a definitive signal on its own, the Coinbase Premium offers a subtle hint that underlying investor sentiment might be stronger than recent price action suggests.

Navigating the Crypto Storm: Key Takeaways

• Q1 Disappointment: Bitcoin’s Q1 2024 performance is the weakest since 2018, highlighting current macroeconomic headwinds.
• Tariff Impact: US trade tariffs are injecting significant uncertainty into the crypto market, with potential for increased volatility.
• Market Indicators: The MVRV ratio suggests the market is no longer overheated, but a definitive bottom signal is still absent.
• Coinbase Premium Resilience: The Coinbase Premium’s stability hints at potentially decreasing panic selling and underlying investor confidence.
• Watch the Macro Events: Keep a close eye on US jobs data, Federal Reserve announcements, and developments related to trade tariffs for further market direction.

While Bitcoin’s Q1 performance might feel disheartening, it’s crucial to remember the long-term perspective. Market analysis suggests this correction is within historical norms for bull markets. Navigating the current volatility requires vigilance and informed decision-making. Stay tuned for further updates as the crypto market responds to these crucial macroeconomic events.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrency investments are inherently risky, and readers should conduct thorough research and consult with a financial advisor before making any investment decisions.