Bitcoin is projected to finish May with a loss of little more than 7%, which will be the first monthly loss for the most valuable cryptocurrency on the market since December of last year.
The decline would also be Bitcoin’s worst month since the failure of the cryptocurrency exchange FTX in November of last year, which sparked a 16% price drop.
However, compared to Bitcoin’s performance in May 2021 and May 2022, when it lost 35.38% and 15.56%, respectively, a loss of 7% in May is an improvement.
At the time this was written, BTC was about 2% lower than it was the day before. This drop was caused by both macroeconomic headwinds, like the strengthening of the US dollar because of better-than-expected data on job openings in the US and hawkish comments from the Fed, and technical selling.
Following Bitcoin’s recent rejection of a challenge of its 50-Day Moving Average and confirmation of a downward trend from the April/early May highs, technical analysts have begun to call for a retest of the recent lows that were below $26,000.
According to our research, June has historically been the month with the lowest rate of price appreciation for Bitcoin over the entire year.
Since 2011, Bitcoin’s average rate of increase in June has “only” been around 7%, with only September and August witnessing a slower rate of appreciation on average than those months.
Even more worrying is the fact that, on average, the price of Bitcoin has fallen by 15.6% during the month of June over the course of the past three years.
Although it may be unrealistic to anticipate a price decrease of more than 15% in the month of June, chart analysis implies that price risks will continue to be slanted to the negative in the next month.
The above chart analysis points to Bitcoin being in a downward trend over medium term, and recent changes in the macro environment point to the fact that this downtrend is warranted.
The notion that the Federal Reserve is through with rate hikes has been challenged in recent weeks by data from the United States concerning employment, the service sector (PMI), and inflation that have stayed stronger and hotter than predicted.
The markets have been compelled to price out bets on rate decreases in the second half of 2023 as a result of good data and rhetoric from Fed policymakers. This comes at a time when bets on a US recession have been squared.
As a result, the US dollar has received adequate support, and US rates (such as the 2-year and 10-year, for example) have risen above their most recent multi-month ranges.
Although an optimistic outlook on artificial intelligence (AI) and a reduction in betting on a US recession has continued the surge in US stocks (especially in big tech names), which would ordinarily assist Bitcoin, the stronger currency and higher rates have been the most influential factors.
If incoming data on jobs, inflation, and activity continue to present a picture of a US economy that is resilient and still faces unacceptably high inflationary pressures, then it seems likely that the Fed would raise interest rates again in June, and the price of bitcoin is likely to fall much more.
© 2015-2023 Coinposters. All rights reserved!