Bitcoin Drops 1% to $92,910 as US GDP Shrinks 0.3%

Bitcoin experienced a significant drop, falling below $93,000, following the release of US GDP data that indicated a shrinking economy. The US GDP contracted by 0.3% in the first quarter, sparking concerns about an impending recession among analysts. This economic data release led to a sharp decline in Bitcoin's price, reaching an intra-day low of $92,910. Concurrently, traditional market indices such as the DOW and S&P 500 also saw declines of 1% and 1.3%, respectively.

The contraction in GDP was primarily attributed to a surge in imports ahead of President Donald Trump’s tariffs. This surge in imports, which are subtracted from GDP calculations, suggests that the economic pullback may be more transitory than indicative of a long-term downturn. Despite the initial shock, Bitcoin managed to rebound back to the $94,000 range as markets digested the news. This rebound highlights the resilience of Bitcoin and its ability to recover from short-term market fluctuations.

Technical analysis indicates that Bitcoin is holding a pattern of daily higher lows, suggesting a bullish trend. The resistance level at $95,000 remains strong, but the overhead resistance at $95,500 to $96,400 aligns with the 61.8% Fibonacci retracement level, which is a common level of resistance in technical analysis. This alignment suggests that Bitcoin may face challenges in breaking through this resistance level in the near term.

Despite the recent drop, there are several positive factors supporting Bitcoin's price. Over the past two weeks, spot volumes have driven the bulk of Bitcoin's bullish price action. Additionally, there has been a significant increase in Bitcoin buy demand from various sources, including spot Bitcoin ETF inflows totaling $3.02 billion as of April 29, with BlackRock’s IBIT being a notable leader. The US Federal Reserve Board of Governors also announced that banks can independently and freely move forward with offering crypto-based products and services, further boosting market confidence.

Investment banking firm Cantor Fitzgerald partnered with SoftBank, Tether, and Bitfinex to launch a $3 billion Bitcoin acquisition company called 21 Capital. Additionally, Strategy made another $1.42 billion Bitcoin purchase. coinbase institutional head of strategy John D’Agostino mentioned that sovereign entities made Bitcoin purchases during the sell-off below $75,000. Furthermore, an increasing number of international companies are adopting the “MicroStrategy playbook” by incorporating Bitcoin into their treasury strategies.

In summary, while the shrinking US GDP triggered a news headline-driven correction in Bitcoin's price, sustained demand on the buy side and strengthening market structure fundamentals are likely to outweigh today’s brief downside blip. The market fundamentals remain strong, and the recent derisking in the crypto market is likely transitory. This suggests that Bitcoin's long-term prospects remain positive, despite short-term volatility.

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