The crypto market experienced a sharp decline during Asia trading hours on May 31, reversing earlier gains. The global crypto market cap fell by 1.37% to $1.14 trillion, with leading cryptocurrencies Bitcoin and Ethereum each dropping by 2%. As anticipated, investors are liquidating their holdings due to Bitcoin’s price closing the month 8% lower for the first time this year.
Despite rallying 85% earlier this year, Bitcoin’s impressive ascent began to lose steam in mid-April, even dropping below the crucial 200-week moving average (WMA) level. Ethereum demonstrated strength, but the current pressure it faces can be attributed to Bitcoin being stuck in a range for weeks and the debt ceiling deal. Whales and institutional investors maintain a bullish outlook on Bitcoin and Ethereum; however, a short-term decline is expected as the debt ceiling deal will prompt the US Treasury Department to issue a T-bill, thereby withdrawing US dollar liquidity.
Bitcoin’s price currently trades below a critical resistance zone, following a short-squeeze that briefly moved prices upward during a low liquidity long weekend. Bitcoin’s open interest has dropped to $8.5 billion as some longs are being liquidated to fill the CME gap. Yet, Bitcoin’s prices could continue to rise. Over $80 million in crypto liquidation occurred in the last 24 hours, including $25 million and $14 million in Bitcoin and Ethereum, respectively. While this liquidation is relatively small compared to earlier instances, macro factors like lower factory data from Japan and China contribute to the decline.
A hawkish tone from the typically dovish Bank of Japan contributed to the crypto market’s fall during Asian hours. Bank of Japan Governor Kazuo Ueda warned of tightening on May 31 due to high inflation’s impact on the country. As a result, the global stock market saw losses, with European and US markets expected to open lower.
Bitcoin’s price finds itself at a pivotal point. If it falls to the 200-WMA, Ethereum could drop below $1,800, followed by other altcoins. Bitcoin’s price is currently trading near $27,000, and Ethereum is at $1,850. Crypto market actions during US trading hours will likely determine the overall market sentiment.
Institutional buying appears to be on the horizon, with Bitcoin potentially reaching the $30,000 mark. However, investors must carry out thorough market research before investing in cryptocurrencies, as the presented content contains the author’s personal opinion and depends on market conditions. The author and the publication assume no responsibility for personal financial losses.
Source: Coingape
