Bitcoin Sees 19% Rebound Amid Signs of Easing Inflation; Tether Hits New Market High
Summary:
Bitcoin's (BTC) value has bounced back by over 19% after a two-month low, primarily due to easing inflation and a boost from exchange-traded funds. However, its recent price action hints at a potential steep correction soon as breakout attempts lack sufficient trading volume. In other developments, Tether (USDT), the world's largest stablecoin, reached a historic market capitalization above $110 billion, which could prompt Bitcoin to reach new highs. The Bitcoin Net Unrealized Profit/Loss (NUPL) metric also indicates a significant portion of BTC holders are experiencing considerable unrealized gains.
Three weeks following a two-month slump to roughly $56,550, Bitcoin's (BTC) value has surged upwards by over 19%, attaining a high of around $67,270 on May 20. Nevertheless, impending days may see a steep plunge, as shown by the BTC/USD daily price chart. This recovery is primarily propelled by indicators of easing inflation, leading bond traders to anticipate a cut in interest rates in September rather than November. Bitcoin's pricing also received a boost from a renewed influx of spot Bitcoin exchange-traded funds (ETFs).
The probability of Bitcoin suffering a dramatic correction soon cannot be ruled out considering its current pricing trend. The BTC/USD pair, since March, has been moving within what appears to be a bull flag pattern after smashing its earlier record high to nearly $73,800. On May 20, BTC's price seemed set to break the flag's upper trendline.
Nonetheless, each breakout attempt is hampered by insufficient trading volume, and this escalates Bitcoin's chance of a pullback. If that happens, the next decline aim aligns with the flag's lower trendline, meeting the 200-day exponential moving average (200-day EMA; the blue wave) at around $53,970 by June. On the flip side, smashing through the flag's upper trendline could trigger a price hike as high as the preceding uptrend, as per the tenets of technical analysis.
If this happens, BTC's value could soar to about $84,000 by June, an increment of 25% from recent price points. Last week saw Tether (USDT), the leading stablecoin in the world, attaining an unprecedented market capitalization above $110 billion. This demand for "sideline capital" could potentially push Bitcoin to set new highest records in the weeks to come.
Availability of newly minted USDT boosts overall liquidity, setting aside more U.S. dollar-tied stablecoins ready for potential deployment toward Bitcoin and the entire cryptocurrency market. These fresh USDT helped Bitcoin’s price leap from $27,000 to $73,000, Lookonchain suggests. Therefore, this fresh supply of stablecoin lessens the chances of a huge Bitcoin crash in the subsequent weeks and months. However, 10x Research posits that Bitcoin needs to surpass the resistance level of $67,500 decisively to record new all-time highs.
As of May 4, the Bitcoin Net Unrealized Profit/Loss (NUPL) metric stood at 0.54. This suggests that a good percentage of BTC holders have significant unrealized profits. Typically, an NUPL value greater than 0.5 signifies an optimistic market sentiment, which could potentially drive further price upscales.
However, it is noteworthy that the NUPL has dropped from its 2024 peak of 0.68, which was set in March. A downward shift in the NUPL is often viewed as a decrease in market euphoria, which usually signals or goes with price adjustments. Consequently, this on-chain signal could result in Bitcoin's price experiencing downward adjustments in the following months.
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Published At
5/20/2024 2:43:30 PM
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