- Bitcoin price has experienced a significant decline, pulling down the broader crypto market as well.
- The current price of Bitcoin is $26,289, reaching its lowest value since March 14.
Factors Contributing to the Bitcoin and Crypto Market Decline
The recent drop in Bitcoin price and the subsequent impact on the crypto market can be attributed to various factors. Initially, positive news on May 10 regarding the falling Consumer Price Index (CPI) led to a rise in the Bitcoin price, reaching as high as $28,317. However, the market was shaken by fake news about the U.S. government allegedly selling 9,800 BTC, causing a flash crash in the Bitcoin price from which it has struggled to recover.
This accounts for only part of the narrative.
Multiple Factors Weighing on the Crypto Market
Several other factors are currently weighing on the crypto market. Firstly, the dollar index (DXY) has experienced a bounce and maintained support levels, which affects risk assets. Additionally, the departure of major market makers, Jump and Jane Street, due to regulatory uncertainty has created liquidity issues, potentially leading to higher volatility.
Moreover, traders are concerned about a potential head and shoulders pattern on Bitcoin’s 1-day chart, indicating a possible crash to $25,000.
The congestion of the Bitcoin and Ethereum blockchains has further contributed to the uncertainty. The influx of Ordinals and the controversial BRC-20 meme coins has caused congestion and delays in transaction confirmations. However, the problem is gradually improving as the backlog of transactions in the mempool decreases.
Furthermore, there are unconfirmed rumors circulating regarding Binance US and Grayscale, adding to the overall uncertainty. Binance US has caused speculation due to a high price premium observed in the Bitcoin market. On the other hand, Grayscale is being discussed in relation to its alleged debt to crypto lender Genesis Trading, with repayment obligations looming.
The rumor suggests that Grayscale may need to sell assets on Coinbase to cover the required capital.
At present, the Bitcoin price stands at $26,289, finding initial support from the 100-day EMA. The overall market sentiment remains uncertain, as various factors continue to influence the price and stability of the crypto market. Traders and investors are closely monitoring these developments to assess the potential trajectory of Bitcoin and the broader crypto market.