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The crypto market is once again in the red, even if Bitcoin’s price has corrected a bit. It was a tough few weeks for crypto investors and holders, with many giving up on their coins. Bitcoin dropped just below $26,000 at one point, although corrections took it to $30,000 once
Another week and more bad news about Bitcoin’s price are piling up. In the middle of a few dips that have taken the price well below $40K, Bitcoin unexpectedly blew past several key support levels, dipping under $30,000 for a moment before regaining ground. It was a week to forget
No major developments on the Bitcoin price front this week. The world’s leading cryptocurrency was trading under $40,000 once again, even dropping into the lower portions of $37,000 at one point. It is fighting heavily to cling to $38,000, although key price metrics make it obvious that it will hold
The crypto market is once again in the red, even if Bitcoin’s price has corrected a bit. It was a tough few weeks for crypto investors and holders, with many giving up on their coins. Bitcoin dropped just below $26,000 at one point, although corrections took it to $30,000 once again. 2022 was supposed to be the year of crypto, but with everything else going on in the world right now, worse things are set to follow.
Petrol and fuel prices are going up, inflation is sky-high globally, and even the prices of food are going up. It’s a disaster waiting to happen, and crypto was supposed to be the alternative. With Bitcoin unable to break past the $30,000 wall, things aren’t looking good. However, analysts always say that the devil is in the details, and there’s one detail that gives investors and holders hope that the price may bounce back soon.
Sky-High Number of 1 BTC Holders
That one stat that gives experts hope is the record number of people holding only one Bitcoin. It’s at an all-time high right now, showing that people are still interested in Bitcoin amid fears of further price drops. This detail is the reason why Bitcoin might bounce back from the current levels, although for that to happen, it needs to retain the $30,000 level.
The current market sentiment on the Fear & Greed index is ‘extreme fear’ as expected. Bitcoin continues to consolidate at around $30K, but it hasn’t managed to go past that point. The good news is that it’s not dropping below it for more than a few days. Experts say that the next resistance is at $40,000, a price point that looks far out of reach as of today.
Traditionally, there have been many people welcoming the dip and buying it. Some of them are first-time holders, and that’s why the number of holders with only one Bitcoin has been on the up. Since the beginning of May, the number of addresses holding between 1 and 10 Bitcoins has jumped to 694,000, which is about 50,000 more than before.
Investors Will Need Time to Return
After witnessing last week’s crash that left the market all but dead, investors will need a bit of time to return back to the market. However, they will return – they always do. It’s an inevitable move with many buying the dip when the price goes down, which is the smart move when it comes to Bitcoin and cryptos.
Rising inflation levels, supply chain issues, and sky-high oil and food prices are certainly disturbing the market. Cryptocurrencies shouldn’t have been clearly linked to them, but as we’ve seen for the past year, they move together with other assets.
Still, experts are adamant that investors will come back to the market, even if they need a bit of time. Bitcoin is currently consolidating around $30,000, and things could change overnight. When it inevitably starts going up again, you can bet that people will be there to invest.
Another week and more bad news about Bitcoin’s price are piling up. In the middle of a few dips that have taken the price well below $40K, Bitcoin unexpectedly blew past several key support levels, dipping under $30,000 for a moment before regaining ground. It was a week to forget for Bitcoin investors and fans, bringing extreme fear to the Fear & Greed index at the moment.
What’s next for the cryptocurrency? No one knows at the moment. It could be the darkest night before just before the dawn, or it could spell further drops that will push millions of people out of the market. One thing’s clear – the window for a May price hike is closing soon unless a miracle happens in the coming days or weeks.
What’s Behind the Recent Declines?
There’s not a single factor driving the current declines. Analysts have cited numerous key market drivers as the culprits including high benchmark rates and the asset sell-offs accumulated during the COVID-19 pandemic. While crypto should grow and sell independently of other assets, it has been ‘riding’ together with gold and the financial sector in recent times. The (still) ongoing war between Russia and Ukraine isn’t helping things, as traders and investors are feeling the effects of global recession and sky-high inflation concerns.
Monetary tightening policies are making investors flee risk assets. Central banks around the world have injected trillions of dollars of stimulus into the global economic system in order to shore up the unfavorable conditions driven by the pandemic. The low interest rates set by banks are starting to reverse, and it’s all hurting the financial system. Cryptocurrencies are obviously affected too, as prices have been dropping for the best part of recent months.
To make matters worse, the Luna Guard Foundation has dumped Bitcoin on the market in an attempt to fix the UST peg, a desperate move that has worsened the recent dips.
El Salvador Buys the Dip Again
And while recent dips have been hell for investors and longtime holders, the country of El Salvador has been buying it all the time. President Nayib Bukele announced the buy of 500 Bitcoins at a price of just over $30,000 on Twitter, and said that the country can make around $1 million in profit when the price went up hours later. It took another dip later, so it wasn’t a moment to celebrate.
With the 500 new Bitcoins, El Salvador’s stockpile currently sits at over $71 million. Many have criticized the experiment as non-working, although the president continues supporting Bitcoin. Work on the proposed Bitcoin City should start soon, and further dips are likely to be bought by the country too.
The Central African Republic has followed El Salvador to the Bitcoin land, accepting it as legal tender. It was a move highly criticized by the IMF – a bit of a copy-paste situation of what happened with El Salvador. It remains to be seen if the recent dips will give Bitcoin more power in the long run, or if the crypto market crashes like pessimists think.
No major developments on the Bitcoin price front this week. The world’s leading cryptocurrency was trading under $40,000 once again, even dropping into the lower portions of $37,000 at one point. It is fighting heavily to cling to $38,000, although key price metrics make it obvious that it will hold the line.
The month-long descending channel continues this week, but many analysts are optimistic going forward. Historically, May has been a great month for Bitcoin. While there are no major links between cryptocurrencies and seasonality, Bitcoin has jumped up big every year in May, and it shouldn’t be any different this year.
May is a Relative Success Month for Bitcoin
Take a look back at the past few years and you’ll see a pattern. May has been a successful month for Bitcoin over the past 11 years. The top cryptocurrency ended the month up 7 times and down only 4. Of course, the volatility makes it very hard to predict what the future holds, but amid all the tension in the world and the negative price trends that have been developing on the crypto market, such positive news is what traders and investors need.
Will May be lucky for Bitcoin this year? Analysts are cautiously optimistic, considering what a rollercoaster ride this year has been for Bitcoin so far. Surprisingly, the crypto market has been mirroring the stock market in recent months. The overall macro environment is not great as it is, and increasing interest rates and sky-high inflation are the reasons why people are hesitant to invest in risky stocks.
Major price moves in May were big in the past, but this year, we shouldn’t expect that kind of development. Such price moves were easier in the past when the world wasn’t thrown in chaos like it is now. Two years of the pandemic proved hard enough for the financial system, and the ongoing Russia-Ukraine war has made things even worse.
Still, it would be great to see at least a tiny price jump in May which should be a light in these dark crypto times.
Small Median Moves Likely
Analysts expect a median price move of just over 3% this May, which is still a solid move ahead. The risk-off environment in the past few months has impacted Bitcoin. That’s why prices have been dropping so far, but it could all change later this month. As mentioned earlier, Bitcoin has been moving with the stock market so far, and just like it, it has reacted negatively to financial plans from the Fed and other countries.
Aggressive hikes are to be expected, but those could be short-lived. Bitcoin’s correlation to the S&P 500 is at an all-time high this year, which isn’t a surprise considering the market conditions. In times such as these, financial assets trade in close correlation, and that’s why crypto prices haven’t been impressive.
In general, seasonal projections are not strong enough, but May gives Bitcoin traders hope. Let’s wait and see what happens.
Bitcoin’s losses this month continue after the world’s leading cryptocurrency stumbled below $40K early on Monday. It hit the lowest price points since March and is over 20% down from last month’s surprising highs. It’s clear that the cryptocurrency market is in a slump, with further price declines expected. The current secondary support level is at $27,000, with further pullbacks expected in the coming weeks. The silver lining is that investors may still turn to Bitcoin if the Fed hikes rates to fight inflation.
Still, for current Bitcoin holders, this isn’t good news. After last month’s highs, Bitcoin has been in yet another slump with price drops that go deeper than expected. In recent times, cryptos have been moving with tech stocks, and as they drop, the biggest pessimists say that it could drop to $30,000 come June.
The Fed’s Inflation Response is Key
Inflation rates are soaring in the USA and elsewhere around the world, prompting the Federal Reserve to take steps and subdue it. It is expected to hike the rates in 50 basis point steps in the following months which should keep higher inflation at bay. With that decision, it will surely influence the price of Bitcoin and other cryptos.
In the coming months and years, holding dollars will be more valuable. Due to this, many investors will likely turn to Bitcoin and cryptocurrencies or assets such as gold. The negative correlation of Bitcoin with real rates has emerged in the past few years, and it seems it’ll continue moving forward. Of course, Bitcoin will still be driven by other factors such as network usage and user growth. Still, it’s important to understand the evolving macro relationships and how they influence the crypto market.
Tech stocks have been a driving force for Bitcoin’s price lately. They’ve been down this past week which correlates to another price slide. It remains to be seen how Elon Musk’s new acquisition, Twitter, factors into tech prices and cryptocurrencies. Musk is a long-time crypto supporter and if he somehow integrates it into the social media platform, price jumps are to be expected.
Market in the Red
It’s not just Bitcoin that’s been having a recent slump. The whole market is in the red, with only slight gains on some fronts. It’s clear that the market is in a downward slide which should prompt 3-6 months of price recovery.
Many experts believe the current situation to be a short-term pain and long-term gain. If that’s the case, the recovery will come soon enough via a pivot by the Federal Reserve. The Fed won’t be able to sustain its inflation-busting monetary tightening for a long time, eventually switching back to easing. The whole world expects a global recession, which might make BTC fly.
It remains to be seen when that happens, with most experts predicting current levels to keep through at least June. If there’s any major movement, it’s likely to show its face later this year.
Bitcoin continues a solid rebound from a five-week low it hit on Monday when the leading cryptocurrency slid below $40,000. It scared many investors but luckily, they all kept their cool. At the moment of writing, the biggest cryptocurrency by market volume is changing hands at over $41,300. It’s still some way off from the $48,000 it hit a few weeks ago, but according to experts, the macro crypto landscape is looking pretty good.
The great thing about it is that it’s up by nearly 3% over the last 24 hours, and there’s hope the climb will continue. It’s good that prices are recovering from the most recent selloff, yet traders appear to be waiting on the sidelines to see what happens amid rising bond yields and slowing volume. Last week’s supposed breakout turned out lackluster, but this week’s rebound might put Bitcoin in a much better position.
Macro Trends Put a Lot of Pressure on Crypto
The past few weeks have been particularly hard on cryptocurrencies due to pressure from macro trends in wider markets. The world is facing an economic crisis fueled by two years of coronavirus restrictions and the recent war between Russia and Ukraine. Investors are bracing for a shift in monetary policy by the Fed, and markets directly related to the central bank are expected to raise interests many times over. Plus, historically the inflation has never been higher, which complicates matters even further.
Even though cryptocurrencies are supposed to be trading independently, recent developments have seen them go shoulder to shoulder with traditional markets. Tech stocks, for example, seem to have a big influence on crypto. The rise in bond yields also has an impact. The rising inflation and slowing economic growth is a deadly combo known as stagflation that has a much wider impact on finance. Cryptocurrencies seem affected too, and that’s why investors are staying put and waiting to see what happens.
Still, the fact that Bitcoin and Ethereum are holding ground over $40,000 and $3,000 each is positive news. They’re in great position for a breakout, with many investors waiting for Bitcoin to break the $50,000 deadlock. Many are still bullish on Bitcoin and expect it to own this year. The Ukraine war certainly slowed things down, but Bitcoin is expected to end 2022 on a high. We all know how volatile the price can be, so everything can change in a day.
Whales Making Waves?
Crypto analyst Marcus Sotiriou says that there’s a bit of concern regarding the behavior of some crypto whales. He says that at least four major wallets that hold over 10,000 coins have drastically decreased in the past few weeks, suggesting that a lot of coins may have been moved to a broker. This dilutes the short term supply and puts extra pressure on Bitcoin it certainly doesn’t need.
Still, he’s optimistic about the crypto market in general. The Fear and Greed index is still showing Extreme Fear, but the oversold conditions have dropped to 28 out of 100, down from last week’s 34. For now, it’s good that Bitcoin can still rebound, and barring further sub-$40,000 slides, it should be fine.