Home / Markets / Cryptocurrency /  Bitcoin logs worst monthly fall in nearly three years in May: What’s next?

Bitcoin logs worst monthly fall in nearly three years in May: What’s next?

During 14-20 May, when Bitcoin slumped close to 47%, investors had booked losses of $14.2 billion. (Photo: Reuters)Premium
During 14-20 May, when Bitcoin slumped close to 47%, investors had booked losses of $14.2 billion. (Photo: Reuters)

  • From $57,829 at the beginning of May, the world’s biggest cryptocurrency closed at $37,341, logging a fall of 36%. The digital asset had recovered from a low of $30,000 during the month and hit a high of over $40,500 last week but failed to sustain gains

NEW DELHI: With a drop of 36% in May, Bitcoin has posted its worst fall since November 2018 as lofty valuations, concerns over its environmental impact and a regulatory crackdown on cryptocurrencies in China took a toll. Moreover, Bitcoin’s fall last month is the second-biggest since May 2013, as per data available with cryptocurrency tracker CoinGecko.

The bearish factors for bitcoin during the month included higher-than-expected inflation data in the US, Tesla chief Elon Musk announcement that the company will no longer accept bitcoin payment, criticism surrounding Tether's reserves, news that Binance is under investigation by the US Department of Justice and China reiterating its ban on financial institutions from participating in crypto.

From the level of $57,829 at the beginning of May, the world’s biggest cryptocurrency closed at $37,341, logging a fall of 36%. The digital asset had recovered from a low of $30,000 during the month and hit a high of over $40,500 last week but failed to sustain at that level.

Bitcoin returns.
View Full Image
Bitcoin returns.

The Bitcoin market has become a battleground between bulls and bears, and the key question on investors’ minds is what’s next?

Fundamental view

During 14-20 May, when Bitcoin slumped close to 47%, investors had booked losses of $14.2 billion. According to an on-chain report from Glassnode, an all-time high of $4.53 billion in losses were booked on 19 May and $14.2 billion for the week.

The report also highlighted that a large portion of the recent selling activity was driven by short-term holders, those owning coins purchased within the last six months.

Despite the recent bump, bitcoin has rewarded long-term investors with a year-on-year growth of 278%.

“The current consolidation in prices is healthy from a short-term perspective and can be used for fresh entry into the crypto assets. It should be noted that bitcoin has the largest market capitalization amongst peers by virtue of its technological advantage and global acceptance. Any developments in these aspects would act as a trigger for the short term and hence investors should remain cautious. Investors with a long-term holding period can remain invested with an appropriate stop-loss," crypto exchange CoinDCX said.

Technical view

Bitcoin is currently trading in a range in the shape of a narrowing wedge. A breakout above the top of the wedge could result in further upside momentum. “A breakout below could lead to a retest of the recent lows around $32,000. Resistance on the upper end may be found around $44,000," said Vikram Rangala, COO, ZebPay.

Bitcoin technicals
View Full Image
Bitcoin technicals

From medium-term perspective, Zebpay said that as seen on the global BTC-USD chart, in the intermediate time frame, shown on the daily price chart, bitcoin price is consolidating around the 50% level of the Fibonacci-Pingala retracement from the all-time high just under $60,000. “Support and resistance levels for this area of consolidation can be found from trend-lines going back several months. A breakout from the wedge-shaped consolidation pattern could result in further momentum either upwards or downwards," Rangala added.

Medium term technical outlook.
View Full Image
Medium term technical outlook.
ABOUT THE AUTHOR

Abhinav Kaul

Abhinav Kaul writes on cryptocurrencies and mutual funds at Mint. His previous stints include ETMarkets, Reuters Bangalore and Press Trust of India.
Know your inner investor Do you have the nerves of steel or do you get insomniac over your investments? Let’s define your investment approach.
Take the test
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less

Recommended For You

Trending Stocks

×
Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout