Bitcoin has been enduring a rocky season this May, marking a first since July 2021 when less than 800,000 unique Bitcoin addresses engaged in daily transactions on the blockchain. This dwindling activity correlates with a market-wide correction currently impacting Bitcoin and other digital currencies.
For More Context: Bitcoin Unique Addresses Plunge, BTC Price At Risk of Dropping Below $24K
However, an intriguing aspect of this downturn is the resilience of Bitcoin’s price, which despite the reduced transaction rate, continues to maintain a relatively high standing, without dropping off the crucial resistance level of $25,000 as many expected.
Prepare For A Chaotic Mid-May
A salient headline is another rate hike by the Federal Reserve, initiated as U.S. non-farm payrolls marginally exceeded expectations. As we enter the latter half of the month, speculation rife, the question looms – are the bulls preparing to charge back into the market?
Bitcoin, despite a promising April, had stumbled to a two-month low by mid-May. This bearish shift in market sentiment was not entirely unexpected given the short time frame in which several key data releases occurred, thereby injecting a level of price uncertainty into the mix.
Monetary Policy Moves and Market Implications
In a bid to steady the economy, the Fed has hiked interest rates by 25 basis points, following a rise in non-farm payrolls to 253,000, compared to an anticipated 180,000.
Subsequently, inflation recorded a decrease to 4.9% in April, leaving market observers uncertain about the Federal Reserve’s potential moves during the upcoming June meeting.
Is The Future Bleak?
While some pundits suggest Bitcoin might witness a capital influx if the United States defaults on its debt, the imminent risk of the U.S. Treasury depleting its funds threatens to strain liquidity.
Also Read: Bitcoin Price Prediction: BTC Price On The Verge Of 50% Drop – Coinpedia Fintech News
Crypto prices, which still have a high correlation with traditional indices like the Dow and S&P 500, face a potential downturn if major banks’ prediction of a steep U.S. recession in 2023 comes to pass.
Bitcoin is trading at $27,365 at the time of writing this article.