The crypto market experienced a sharp correction during early U.S. trading hours, with Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) all facing significant declines. This bearish trend led to the liquidation of $120 billion, resulting in a 2.5% drop in the overall market capitalization, now standing at $2.52 trillion. Bitcoin’s price tumbled over 3%, trading at $67,241. Similarly, Ethereum and Ripple followed suit, with XRP seeing a 1.73% decline to $0.5188. This widespread downturn has increased volatility across the broader crypto market. On-chain metrics indicate a significant inflow of crypto assets to exchanges, suggesting that more investors are preparing to sell their holdings, a common precursor to market corrections. This increase in supply on exchanges often results in lower prices, exacerbating the current bearish sentiment. Additionally, declining engagement and activity further underscore the health of the crypto market. Metrics such as active addresses, transaction volumes, and network activity are all showing signs of decline. This reduced activity indicates waning investor interest and engagement within the crypto ecosystem.

On May 23rd, Bitcoin’s price dropped by 2.5%, surprising traders who had expected new all-time highs following the crypto’s early-week rally to $72,000. BTC experienced a notable 4.5% decline, retesting its support at $66,750. This movement led to a $1.3 billion decrease in Bitcoin’s futures open interest, despite only $40 million in leveraged longs being liquidated over the previous 12 hours, according to data. The dip in Bitcoin’s price coincided with a 1.5% correction in the S&P 500 futures, which had reached an all-time high of 5,368 points earlier in the day. Bulls are now keen to see the $67,000 support area hold, suggesting that the price will likely range between $67,000 and an all-time high of $73,835. Additional factors, such as the anticipated approval of Ether’s spot exchange-traded fund (ETF) in the United States and various macroeconomic indicators, likely contributed significantly to Bitcoin’s sudden correction.

The price of Ether has barely moved despite the landmark approval of spot Ether exchange-traded funds (ETFs) in the United States, likely due to two main reasons. On May 23rd, the U.S. Securities and Exchange Commission (SEC) approved eight spot Ether ETFs for listing on their respective exchanges. Ether fell by 3.4% just before the news, then recovered by around 5% shortly after. However, the ETFs can only officially launch once the SEC approves the S-1 forms. Industry experts believe that the approval process for the spot ETH ETF S-1 applications could take weeks or even months. Additionally, despite Ethereum’s recent popularity and price growth, Hong Kong’s spot Ethereum ETFs have not seen a rise in subscriptions or trading volume. On May 22nd, the single-day net subscription was 62.8 ETH, and the total single-day transaction volume was only $390,300.

Additionally, the U.S. S&P Composite PMI rose to a 25-month high in May, reaching 54.4, up from 51.3 in April. Recent legislative developments further complicate the landscape. The FIT21 Act, which passed the U.S. Lower House on May 22, introduces uncertainty regarding the SEC’s authority over crypto assets that do not meet the “sufficient decentralization” criterion. This potential for increased regulatory oversight could deter investors wary of greater governmental intervention. 

Technical Outlook

Bitcoin

BITCOIN after breaking the psychological level of $60k made a low of $56,552. However, the lower shadow around the crucial support level of $56,000  indicated buying from these levels and the prices rallied up to $71,979. Post this move, BTC has been trading in red for the fourth consecutive session. The asset is struggling to sustain and give a weekly closing above $70k. To witness further rally, it needs to break, close and sustain above its all-time high. $67,000 and $60,000 will act as a strong support for the asset.

Ethereum

ETH after making the high of $4,093 witnessed a sharp profit booking and the prices corrected almost by 31% and dropped to $2,817. On a daily time frame, the asset was trading in a ‘Descending Triangle’ pattern and was taking multiple support at $2,850. The bulls finally succeeded in giving a breakout above the pattern and prices have rallied up to $3949. ETH has a strong resistance at $4,000, once it breaks and sustains above that then we may expect it to further rally up to $4,400.

BNB

BNB after making the recent high of $645 witnessed a sharp correction and the prices fell almost by 23% and dropped to $495.8. The asset took support at the key level of $500 and rallied up to $634. The bulls, however, failed to manage their grip on the asset and couldn’t break the recent high of $645 and the prices saw another dip to $508. Currently, BNB is trading in a range from $550 to $620 with low volumes. Breakouts on either side of the range with good volumes will further decide the trend for the asset.

Weekly Price Snapshot

USD ($)16 May 2423 May 24Previous WeekCurrent WeekCloseClose% ChangeHighLowHighLowBTC$65,232$67,9304.14%$66,712$60,208$71,946$65,119ETH$2,945$3,77728.25%$3,053$2,864$3,944$2,934BNB$569.00$598.675.21%$599.18$561.13$629.86$586.84

Support and Resistance

Resistance 2$85,000$4,400$1.25$650Resistance 1$73,777$4,000$1$600USDBTCETHMaticBNBSupport 1$67,000$3,400$0.75$550Support 2$60,000$3,000$0.5$500

Market Updates

A 23-year-old crypto user has presented an orange flag with the Bitcoin logo for observers to see at an elevation of 8,849 meters — the summit of Mount Everest.

Kabosu, the Shiba Inu who became an internet sensation and the face of Dogecoin, passed away peacefully at the age of 17. The crypto community honours her legacy.

On May 23rd, Coinbase’s chief legal officer, Paul Grewal, announced that customers in the state of New York could once again trade XRP on the crypto exchange after a nine-month hiatus.

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Filed under: Bitcoin - @ May 24, 2024 9:16 am