Bitcoin Plunges Below $60,000! Coin Price Drops 15%
Bitcoin (BTC) has experienced a nearly 15% decline in price in the past few days, falling below the $60,000 mark. This is the worst-performing month since the closure of the cryptocurrency exchange FTX in November 2022, causing concern among investors who were expecting a rapid surge in price after the halving event.
The price of Bitcoin has been gradually declining since April 30 and experienced a sudden drop of 5% on May 1, falling below $60,000 to $56,789. As of the time of writing, the price of Bitcoin stands at $57,426, which is a 14.11% decrease compared to the past month.
Market experts believe that there are three main reasons for the weak Bitcoin 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 major companies such as BlackRock, Invesco, and Fidelity listed multiple Bitcoin spot ETFs, sparking a trading frenzy.
Not only did these ETFs achieve a record trading volume of nearly $10 billion in just three days, but they also pushed the price of Bitcoin to a historical high of $74,000 from $47,000.
However, as the ETF frenzy gradually subsided, these 11 Bitcoin spot ETFs saw a net outflow of $182 million by April 29, compared to a net inflow of $4.6 billion in March. This means that more and more people have started to sell their ETF holdings.
Standard Chartered, an investment bank, stated that US Bitcoin spot ETFs have seen five consecutive days of fund outflows, and the current Bitcoin trading price 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 also pointed out that he would be surprised if Grayscale’s GBTC experienced net inflows.
Reason 2: Hong Kong Cryptocurrency ETFs Did Not Bring Momentum
Hong Kong recently approved Bitcoin and Ethereum spot ETFs, which officially launched for trading on Tuesday (April 30).
On the first day of trading, the six newly launched spot cryptocurrency ETFs in Hong Kong achieved a trading volume of HK$87.5 million (approximately $11.2 million). Compared to the $4.6 billion trading volume of the 11 US Bitcoin spot ETFs, it can be said that the Hong Kong market did not have much impact, which disappointed many investors.
However, Eric Balchunas, a senior ETF analyst at Bloomberg, stated that considering the difference in the size of the ETF markets in Hong Kong and the United States, the data performance on the first day of trading is actually significant for the Hong Kong market.
The disappointing performance of the Asian market data has dampened the overall sentiment in the cryptocurrency market, and the price of Bitcoin has been falling since April 30.
Reason 3: US Federal Reserve Postpones Interest Rate Cut
With increasing pressure on wages and the possibility of further inflation, investors are becoming less confident about whether the US Federal Reserve (Fed) will cut interest rates this year.
Prior to the release of the Fed’s policy statement (expected to be announced around 2 am Taiwan time), the market is concerned that Fed Chairman Powell may adopt a more hawkish stance, which represents support for implementing tight monetary policies to control inflation. This has caused Bitcoin to experience a new wave of decline, falling below $57,000, marking its worst monthly performance since June 2022. Other tokens in the cryptocurrency market have also been affected, with their decline intensifying.
Will Bitcoin continue to decline? Analysts have a unanimous view
According to a report from Korean blockchain analysis company CryptoQuant, the growth in holdings by long-term Bitcoin holders has declined, and the net outflows from Bitcoin spot ETFs and the increase in short positions in the futures market indicate a slowdown in 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 stated that the current price of Bitcoin is already lower than the cost basis of most traders at $63,000. Therefore, they have set a target range of $55,000 to $57,000, which is about 10% lower than the current cost basis of traders.
Analyst Scott Melker believes that $52,000 is a low point Bitcoin can reach in the short term, but this correction is only 23%, which is shallow for a bull market. He further stated, “In this bull market, we have not seen a 30-40% correction like we did in the past.”
Trader and analyst Mags also stated that if Bitcoin closes below $60,000 on a weekly basis, a deeper pullback is expected, potentially dropping to $40,000 or even lower.
He further explained that in this cycle, there have already been four corrections between 20% and 22%. If a similar situation is considered, a 22% pullback from the high point would bring the price to around $58,000 to $57,500.
References:
Cointelegraph, Cointelegraph
