As an analyst with experience in the crypto market, I’m keeping a close eye on the recent bearish trend in Bitcoin (BTC) price. It’s disappointing to see that despite the initial optimism following the release of the Personal Consumption Expenditure (PCE) report from the Federal Reserve, the market has been quickly overshadowed by negative news.
Bitcoin‘s price, which had aimed to close the month positively, is rapidly relinquishing its earned increases in a fiery market context. Currently, Bitcoin is valued at $67,328.02, representing a 1.64% decrease over the past 24 hours. Additionally, the overall crypto market capitalization has declined by 0.99%.
Bitcoin Price and the Bearish Market Movers
Following the Federal Reserve’s release of the anticipated inflation measure, the Personal Consumption Expenditure (PCE), which increased by 0.2% in April as forecasted, brought some stability to Bitcoin’s price. However, this optimistic outlook was disrupted when news broke about the hacking of DMM Bitcoin, a prominent Japanese cryptocurrency exchange.
Events such as hacking incidents have historically led to pessimistic market reactions. The recent breach resulting in over $305 million being stolen from a trading platform has left many investors feeling a sense of deja vu, recalling past experiences with incidents like Mt.Gox and Coincheck. Both these platforms had suffered greater losses than DMM Bitcoin, with a common thread – they were all based in Japan.
Although it’s premature to predict the market-wide consequences, investors are reacting instinctively to avoid being swept up in any unexpected bearish trends.
The decline in Bitcoin’s price can be attributed to over $8 billion worth of Bitcoin and Ethereum options in the market today. Specifically, there are approximately 69,000 Bitcoin options with a value of around $4.7 billion, and about 920,000 Ethereum options valued at roughly $3.5 billion. This substantial influx of options represents a considerable dilution that has increased market leverage, potentially contributing to the price drop.
Based on the information from Deribit indicating a higher number of long positions for Bitcoin, it seems reasonable to expect that the current downtrend may soon reverse.
Bitcoin Has Growth Immunity
As a crypto investor, I’ve noticed an unexpected trend in the market, but I’m keeping a close eye on Bitcoin’s significant growth factors. Institutional investors continue to show strong interest in Bitcoin with the introduction of spot Bitcoin ETFs from prominent issuers such as BlackRock and Fidelity Investments. This ongoing demand from institutions provides a robust foundation for Bitcoin’s future price growth.
Lately, Hong Kong and the UK have followed in the footsteps of the US, Canada, and Brazil, among others, by introducing Bitcoin Exchange-Traded Funds (ETFs) and related products. The increasing mainstream adoption of this asset could potentially contribute to a price rebound in the near future.
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2024-05-31 19:29