Bitcoin Stabilizes Around $61,000 After Liquidations on Defi Platforms Surpass $1 Million

• Bitcoin cash ETFs received $31 million in inflows on Tuesday, ending seven consecutive days of outflows.
• US Congressman Matt Gaetz announces a bill proposing payment of federal income tax using Bitcoin.
• The transfer of 400 BTC worth $24.34 million by the German government to exchanges on Tuesday, following the transfer of 1,700 BTC last week, could have a negative impact on the price of Bitcoin.

The price of Bitcoin (BTC) is trading above $61,000 on Wednesday after rebounding 2.6% on Tuesday, as the broader cryptocurrency market recovers slightly. Spot Bitcoin ETFs saw inflows of $31 million on Tuesday, ending a seven-day streak of outflows. In the United States, Congressman Matt Gaetz has proposed legislation to pay federal income tax with Bitcoin, while in Europe, the German government’s transfer of 400 BTC, valued at 24.34 million of dollars, added to the recent selling pressure.

Daily Market Movement Roundup: Bitcoin Spot ETF Receives $31 Million in Inflows on Tuesday

• According to Coinglass data, Bitcoin spot ETFs saw an inflow of $31 million on Tuesday, ending a seven-day streak of outflows totaling $1.13 billion. This increase in ETF flows indicates growing institutional and retail interest in the cryptocurrency, which could influence its price dynamics and market behavior. Collectively, the 11 Spot BTC ETFs hold reserves amounting to $51.73 billion in Bitcoin.

Bitcoin Spot ETF Net Inflow Chart (USD)

• Over the past few hours, the German government transferred 400 BTC worth $24.34 million from its wallet to exchanges Coinbase and Kraken, according to data from Arkham Intelligence. Over the past week, German authorities transferred 1,700 BTC worth $110.88 million to Coinbase, Bitstamp, and Kraken. This heavy transfer activity may have fueled FUD (Fear, Uncertainty, Doubt) among traders, potentially contributing to the 4.6% drop in Bitcoin price on Monday.

• US Congressman Matt Gaetz, an American politician, announced on his official Twitter account that he is introducing a bill that would allow federal income tax to be paid with Bitcoin. If passed, the bill would revise the Internal Revenue Code of 1986 to direct the Secretary of the Treasury to formulate a strategy for accepting the widely used decentralized digital currency. “This is a bold step toward a future where digital currencies play a vital role in our financial system, ensuring that the United States remains at the forefront of technological advancement,” Gaetz said.

• According to data from Santiment’s Defi liquidations on Aave and Compound Finance, the recent price of BTC decline From $63,210 to $60,293 on Monday, liquidations worth over $1 million were seen on Defi platforms. Historically, these peaks are followed by market rallies due to immediate forced selling and opportunistic buying by key stakeholders.

Santiment Defi Liquidation Chart

Technical Analysis: BTC Bounces Off Key Support

Bitcoin price fell below the descending wedge on Monday, falling about 7.5% from its daily high of $63,369 to a low of $58,402. After retesting its crucial weekly high, support At around $58,375, BTC rebounded 5.8%, closing at $61,806 on Tuesday. BTC is trading at around $61,654 at the time of writing, down around 0.2% on Wednesday.

If weekly support at $58,375 holds, Bitcoin could encounter resistance at several key levels.

1. The lower limit of the falling wedge is around $62,000.
2. The upper boundary of the descending wedge and daily resistance hovers around $63,956.
3. The 61.8% Fibonacci retracement level and weekly resistance are at $66,631 and $67,147, respectively.

A break above these resistance barriers could propel BTC price towards a retest of the next weekly resistance at $71,280.

The Relative Strength Index (RSI) is currently well below 50 on the daily chart, close to oversold levels, while the Awesome Oscillator (AO) is below its zero level. For the bulls to make a convincing comeback, both momentum indicators would need to maintain positions above their respective thresholds of 50 for the RSI and zero for the AO.

BTC/USDT daily chart

However, if BTC closes below the $58,375 level and forms a lower low on the daily time frame, it could indicate that bearish sentiment persists. Such a development could trigger a 3% drop in Bitcoin’s price, returning to its previous low of $56,552 on May 1.

FAQ about Bitcoin, Altcoins and Stablecoins

Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any person, group or entity, which eliminates the need for third-party involvement in financial transactions.

Altcoins are any cryptocurrency other than Bitcoin, but some also consider Ethereum to be a non-altcoin because it is from these two cryptocurrencies that the fork occurs. If this is true, then Litecoin is the first altcoin, derived from the Bitcoin protocol and, therefore, an “improved” version of it.

Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset they represent. To achieve this, the value of a stablecoin is linked to a commodity or financial instrument, such as the United States dollar (USD), whose supply is regulated by an algorithm or demand. The main purpose of stablecoins is to provide an on-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are prone to volatility.

Bitcoin dominance is the ratio of Bitcoin’s market cap to the total market cap of all cryptocurrencies combined. This gives a clear picture of how much interest Bitcoin has among investors. High BTC dominance typically occurs before and during a bull run, during which investors resort to investing in relatively stable, high-cap cryptocurrencies like Bitcoin. A decline in BTC dominance typically means that investors are shifting their capital and/or profits to altcoins in search of higher returns, which typically triggers an explosion of altcoin rallies.

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