Bitcoin Falls Below $60,000 Mark! Coin Price Drops by 15%
The price of Bitcoin (BTC) has dropped nearly 15% in the past few days, falling below the $60,000 mark, marking its worst-performing month since the closure of the cryptocurrency exchange FTX in November 2022. This has caused significant concern among investors who were expecting a rapid surge in the coin price after the halving event.
Bitcoin’s price has been gradually declining since April 30th, with a sudden drop of 5% on May 1st, bringing it below the $60,000 mark to $56,789. As of the time of writing, the price of Bitcoin has fallen to $57,426, a decrease of 14.11% compared to the past month.
Market experts believe that there are three main reasons for the weak performance of Bitcoin’s price.
Reason 1: Decline in Bitcoin Spot ETF Craze
At the beginning of this year, the United States officially approved Bitcoin spot ETFs, and soon after, several large companies such as BlackRock, Invesco, and Fidelity launched multiple Bitcoin spot ETFs, sparking a trading frenzy. This not only set a record of nearly $10 billion in total trading volume within three days of trading, but also pushed the price of Bitcoin from $47,000 to a historical high of $74,000.
However, as the ETF craze gradually subsided, these 11 Bitcoin spot ETFs saw a net outflow of $182 million as of April 29th, compared to a net inflow of $4.6 billion in March. In other words, more and more people are starting to sell their ETF holdings.
Standard Chartered, an investment bank, stated that US Bitcoin spot ETFs have seen five consecutive days of outflows, and the current trading price of Bitcoin is lower than the average ETF purchase price of $58,000.
Although Bloomberg ETF analyst James Seyffart stated that it is not surprising to see outflows from ETFs, he would be surprised if GrayScale’s GBTC were to see net inflows.
Reason 2: Hong Kong Cryptocurrency ETFs Did Not Bring Momentum
Hong Kong recently approved Bitcoin and Ethereum spot ETFs, which officially started trading on Tuesday (4/30) in Hong Kong.
The six spot cryptocurrency ETFs launched in Hong Kong on the first day of trading reached a trading volume of HKD 87.5 million (approximately $11.2 million), which is almost negligible compared to the $4.6 billion trading volume of the 11 Bitcoin spot ETFs launched in the United States. This has led many investors to believe that the performance of Hong Kong ETFs fell short of expectations.
However, Eric Balchunas, a senior ETF analyst at Bloomberg, stated that considering the difference in the scale of ETF markets between Hong Kong and the United States, the trading data on the first day is actually a significant number for the Hong Kong market.
The disappointing performance of Asian market data has dampened the overall sentiment in the cryptocurrency market, and the price of Bitcoin has been declining since April 30th.
Reason 3: US Federal Reserve Delays Interest Rate Cut
With increasing wage pressures and the possibility of further inflation, investors seem to be losing confidence in whether the US Federal Reserve (Fed) will cut interest rates this year.
Ahead of the Fed’s policy statement (expected to be released around 2 am Taiwan time on May 2nd), the market is concerned that Fed Chair Powell may become more hawkish (indicating support for implementing tight monetary policies to control inflation), causing Bitcoin to experience another wave of decline, falling below $57,000. This is the worst monthly performance since June 2022. Other cryptocurrencies in the market have also been affected, and the decline has continued to widen.
Will Bitcoin continue to fall? Analysts are unanimous in their views.
A report from Korean blockchain analysis company CryptoQuant indicates that the growth of Bitcoin holdings by long-term holders has declined. Furthermore, the net outflow of Bitcoin spot ETFs and an increase in short positions in the futures market indicate a slowdown in investor demand for Bitcoin.
Regarding the recent decline in the price of Bitcoin, market analysts unanimously believe that it may continue to decline. After falling below the $60,000 mark, Bitcoin analyst Tuur Demeester believes that $50,000 may be the next stop for Bitcoin.
CryptoQuant analysts state that the current price of Bitcoin is already lower than the cost basis of $63,000 for most traders. Therefore, they set their target within the range of $55,000 to $57,000, which is approximately 10% lower than the current cost basis of traders.
Analyst Scott Melker believes that $52,000 is a low point that Bitcoin’s price can reach in the short term, but this correction is only 23%, which is considered shallow for a bull market. He also stated that “we have not yet seen a 30-40% pullback in this bull market.”
Trader and analyst Mags also expressed that if Bitcoin’s weekly closing price falls below $60,000, a deeper retracement is expected, possibly dropping to $40,000 or even lower.
He further stated that so far in this cycle, there have been four retracements between 20-22%. If we use a similar scenario, a 22% retracement from the high point would bring the price to around $58,000 to $57,500.
References:
cointelegraph, cointelegraph