Since the start of May, Bitcoin has reached its lowest point, briefly falling to just under $59,700. Analysts attribute this downturn to a decision made earlier in the year.
The oldest and most well-known cryptocurrency, Bitcoin, experienced a downturn on Monday as its price on the Bitstamp platform briefly fell to just under $59,700 — marking its lowest level since early May.
Recently, Bitcoin had been trading slightly above the psychologically significant $60,000 mark. However, it saw daily losses of nearly $3,000 or 4.5 percent. Concurrently, Ether, the second-largest cryptocurrency by market value, also saw continued declines.
According to Timo Emden of Emden Research, "The negative trend in the crypto market persists at the beginning of the week." Emden attributed this to profit-taking and reduced demand for exchange-traded spot ETFs from the USA, which were approved earlier in the year. These approvals had initially sparked a surge in digital asset inflows, propelling Bitcoin's price to a record high of nearly $74,000.
"Investors are witnessing a stark demonstration of the downside risks associated with ETF investment vehicles approved in the USA since the beginning of the year," Emden remarked. "Following the initial inflows, subsequent outflows exerted downward pressure. Currently, there's scant evidence of a sustainable countermove." Emden pointed out, "Given the uncertainty surrounding the future direction of US monetary policy, there's a notable absence of confident market participants." He added, "It remains unclear when and to what extent the US Federal Reserve might adjust its monetary stance. This uncertainty is particularly impacting risky investments, including crypto assets such as Bitcoin and Ether."
Furthermore, market concerns have arisen over a potential rapid increase in the supply of Bitcoin. The insolvency administrator of the Mt. Gox exchange, which collapsed nearly a decade ago, announced plans to commence repayments in Bitcoin and Bitcoin Cash starting in July. These are assets that have resurfaced following the exchange's dramatic bankruptcy.
Emden highlighted that investors are navigating uncertain waters in terms of technical analysis. A downtrend that began in mid-June has intensified at the start of this week. Additionally, the price of Bitcoin is currently trading well below its 21- and 50-day moving averages, which depict short- and medium-term trends. The widely observed 200-day moving average is serving as a crucial support level, indicative of long-term market dynamics.
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