Cryptocurrency Market Witnesses 3% Dip Amid Bitcoin ETF Inflows Stagnation and Consolidation Patterns
Summary:
On May 28, the cryptocurrency market experienced a 3% drop in net capitalization, led by leading coins Bitcoin and Ether. The decline coincides with the transfer of $9 billion worth of Bitcoin from Mt. Gox wallets to an unknown address. The stagnation of inflows into Bitcoin ETFs in the U.S also marks a trend of caution among traders. Furthermore, the ongoing consolidation pattern in the crypto market could lead to a potential surge toward $3.10 trillion in June or a downward trend to $2.10 trillion.
On May 28, the collective worth of the cryptocurrency market experienced a reduction of about 3%, shrinking it to $2.465 trillion. Bitcoin (BTC) and Ether (ETH), considered the most valuable digital coins, were primarily responsible for this downturn, recording declines of roughly 3% and 2.30% respectively. Notably, this fall in value aligns with the transaction of Bitcoin worth $9 billion from wallets of Mt. Gox, a defunct Bitcoin exchange, to an unknown address. According to recent wallet activities, the said funds were moved in thirteen transactions. Worryingly, Mt. Gox, which was once the largest Bitcoin exchange globally, shut down in 2014 following a debilitating hack that lost hundreds of thousands of bitcoins. Consequently, the expectation of creditors to be reimbursed their holdings could potentially put more selling pressure on BTC markets, resulting in the slight reduction in the general crypto market value as noted on May 28.
In recent times, there has been stagnation regarding inflows into the U.S.-based spot Bitcoin exchange-traded products (ETF) which could be contributing to the crypto market’s current drop. As of May 28, these funds had assets worth $13.68 billion under management, a value that has not seen any significant change for the past three days. This indicates that traders are cautious and unsure about the immediate future of the market, potentially refraining from making large-scale investments or reallocations. Some might choose to sell their holdings to safeguard their profits given the volatility of the market. This approach often results in a more widespread reduction of the cryptocurrency market, as more participants opt to withdraw their gains.
The recent drop in the crypto market can also be understood from a technical perspective as a part of an ongoing consolidation pattern. The market's capitalization has been adjusting within the range of $2.47 trillion to $2.56 trillion for some time now. Today’s dip is the outcome of the resistance met at the $2.65 trillion level. What's worth noting is that the cryptocurrency market's consolidation procedure is happening near the top trend line of its existing descending channel pattern, called a bull flag. A bull flag resolves when the price breaks above the upper trendline and goes up as much as the previous uptrend's height. Therefore, there could be a breakout from the bull flag pattern resulting in a surge toward $3.10 trillion in June. On the other hand, if there's a retreat from the flag's upper trend line, the market may touch the lower trendline at approximately $2.10 trillion, representing its next downside target.
Published At
5/28/2024 3:26:15 PM
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