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(Kitco News) Pre-halving volatility continued to dominate the crypto market on Tuesday as prices reversed course following Mondays spike, with Bitcoin (BTC) plunging below $69,000 while altcoins got hammered.

Stocks trended lower for most of the trading day as investors sat on the sidelines ahead of tomorrows Consumer Price Index (CPI) report, which will help shed light on the likely path of U.S. interest rates. Currently, the market sees a 57% chance of a rate cut in June, while the odds of a cut in July stand at 74%.

A rally into the close managed to lift the S&P and Nasdaq out of negative territory for a gain of 0.14% and 0.32%, respectively, while the Dow finished flat.

Data provided by TradingView shows that Bitcoin has been in a downtrend since it peaked at $72,800 on Monday, falling 6.82% to hit a low of $68,200 on Tuesday afternoon before dip buyers managed to push it back above $69,000.

BTC/USD Chart by TradingView

At the time of writing, BTC trades at $69,030, a decline of 3.75% on the 24-hour chart.

Volatility expected

The recent macro environment is like a pendulum, constantly oscillating between hope for the Goldilocks scenario of a perfect soft landing and fears of inflation picking up again and forcing more hawkish monetary policy, said market analyst Bloodgood in his latestupdate. Right now sentiment seems to be swinging a bit in the bearish direction with stocks having an unusual dump on Thursday, although much of it was retraced by the weekly close.

In any case, all eyes are on tomorrows CPI release, and the consensus forecast is at 3.5%, he said. Given that the market is terrified of the possibility that the Fed may have acted too soon with dovish signaling although theres still no clarity on when the rate cuts will finally come any surprises in terms of hotter-than-expected inflation would have an outsized impact on the market.

Needless to say, caution is advised especially if youve got any leveraged positions open, Bloodgood warned.

While Bitcoin successfully closed the weekly candle above a key level last week, Bloodgood said he is seeing a lot of indecision lately as neither side is managing to follow through after a break in either direction.

However, we are still slowly drifting upwards and printing higher lows, which gives me confidence that bulls are still in control here, he said. The big test will come at the current All-Time-High which is slightly above $73,700.

Apart from BTC reclaiming the $70k level, not much has changed, Bloodgood noted. Times are uncertain as we are about to have a BTC halving right after making a fresh ATH which isnt how cycles typically look so were definitely in uncharted territory.

Briefly touching on gold, he highlighted that Gold is simply not stopping. New week, new all-time high. There is not much you can do right now but watch it fly, he said.

Overall, Bloodgood noted that this bull market cycle in the crypto market is different from all its predecessors thus far, so traders would be wise to trade the chart in front of them and not rely on fractal patterns or previous cycles to determine what will come next.

Apart from a Bitcoin ATH before the halving, another thing that makes this cycle unusual is that memecoins are capturing so much attention and so persistently when BTC is barely above the previous ATH, he said. While some see this as a top signal, I think its got more to do with the normie-friendly nature of memecoins.

Instead of having to understand complex technical details of a project and worrying about when and how VCs will dump their bags, many new entrants to the market find it much easier to speculate on something based on how funny and catchy it is, he added. Of course, this is still largely just gambling, as there are countless rugs for every memecoin that pulls 100x, not to mention that even the ones that pump most often end up teaching the few people that got in early some hard lessons about liquidity and sustainability.

That being said, there are still technically impressive projects that are doing great, and I do believe that capital will start to rotate more and more to these tokens later in the cycle, he concluded.

According to MN Trading founder Michal van de Poppe, in the near term, Bitcoin is likely to trade sideways and consolidate until sometime after the halving.

Altcoins follow Bitcoin lower

The altcoin market was hard-hit by Bitcoins pullback, with only 10 tokens in the top 200 registering a gain of more than 2%, while the vast majority recorded losses.

Daily cryptocurrency market performance. Source: Coin360

Theta Fuel (TFUEL) led the gainers with an increase of 24.5%, followed by Saga (SAGA), which gained 10.4%, while MX Token (MX) climbed 9.4%. Meme coin dogwifhat (WIF) was the biggest loser, falling 14.9%, while Arkham (ARKM) lost 13.9%, and Wormhole (W) declined 13.5%.

The overall cryptocurrency market cap now stands at $2.6 trillion, and Bitcoins dominance rate is 52.3%.

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Crypto bloodbath: Altcoins crushed as Bitcoin tanks pre-halving - Kitco NEWS