Bitcoin Slides Towards $27K, Down 9% Over the Week

Bitcoin’s downward trend continues to bite, with the cryptocurrency currently trading at around $27,500—down over 9% in the past week, per data from CoinGecko.

The decline in BTC erased Bitcoin’s early April gains above $30,000, moving below the previous month’s closing value of around $28,500.

Other leading cryptocurrencies also slipped over the past week, with the majority of the top 10 biggest cryptocurrencies by market cap, barring stablecoins, down double digits on the week.

A strengthening U.S. dollar drove the downturn, with the American central bank expected to raise the benchmark interest rate by another quarter basis point in the upcoming May policy rate meeting. A higher-yielding dollar makes non-yielding assets like cryptocurrencies and gold less attractive.

Lately, Bitcoin has had a stronger correlation with gold than the stock market indices, according to data from Valkyrie Fund—especially after the collapse of Silicon Valley Bank, which triggered fears about banking failures.

Another factor reportedly brewing in the American economy is the debt ceiling crisis. The U.S. Treasury holds historic amounts of debt; the current debt exceeds the debt limit of $31.4 trillion, with around $31.46 trillion taken in loans already.

The U.S. Treasury debt ceiling is the maximum amount of debt the U.S. government can borrow to meet its financial obligations. Congress determines the debt ceiling, and a majority vote can change it.

A failure to raise more debt could lead to an economic crisis in the U.S. as the government delays interest payments of U.S. bonds. The market’s apprehension was evident as the value of credit default swaps contracts for betting against the U.S. dollar spiked to 2008 levels.

While some Bitcoin advocates believe that the price of Bitcoin could be boosted should confidence in the American economy falter, the impulse reaction of a global economic crisis has created a lot of uncertainty in markets.

Low liquidity conditions have also been instrumental in moving markets by relatively small-sized orders. Last week, two April 20 sell orders worth $5.97 million triggered a bearish breakout in Bitcoin’s price, according to Riyad Carey, a researcher at Kaiko Data.

In a tweet, Carey highlighted the perils of “thin order books” and low liquidity conditions causing significant drops, due to orders of magnitude around 199.2 BTC, worth around $5.97 million, with BTC at $30,000.

Thin order books mean that there are relatively fewer buy and sell orders around the market’s trading price, making it easier for high volume traders to move prices in both directions.