Bitcoin
Bitcoin is heading for its worst month since 2022 and could face more cuts in May
Bitcoin’s seven-month rally is on pause in May now that two key catalysts closely watched by investors this year – bitcoin ETFs and the halving – have ended. The leading cryptocurrency fell nearly 14% in April, according to Coin Metrics, and is on track to record its first negative month in eight, and its worst month since November 2022, when FTX collapsed. Still up 43% in 2024. BTC.CM = 1 million Bitcoin mountain last month “The well of catalysts to stimulate bitcoin appears to have run dry with ETF demand slowing and the halving behind us, and it could very “Well, we entered a multi-month sideways snooze festival, repeating March to October 2023, when bitcoin fluctuated in a trading range of $5,000, between $25,000 and $30,000,” said Antoni Trenchev, co-founder of Cryptocurrency exchange Nexo. May has proven to be a drag on bitcoin in recent years, but investors should avoid getting sucked into a negative mindset in the coming weeks, Trenchev added. If the cryptocurrency ends next month in the red, it will be the fourth year in a row. However, it has proven to be a winning month in previous halving years, 2012, 2016 and 2020. Furthermore, he said, history suggests that it is only a matter of time before the price of bitcoin rises rapidly after the halving. reduction by half. Bitcoin investors are hoping to see big returns in the coming months, not just because of this historical trend, but because of the success of the recently launched US bitcoin ETFs, which have dominated crypto investment discourse so far this year and will continue to do so. be the main story in the coming months, analysts say. “This halving reduced daily bitcoin issuance from 900 to 450 approximately – a fairly small reduction compared to the amount of ETF demand that flows into the asset on a given day, or in some cases not at all,” he said. Lyn Alden, founder of Lyn Alden Investment Strategy and board director at Swan Bitcoin. “Changes in demand tend to have a greater impact on the price of bitcoin over any multi-month period…that’s why if you look at halvings, bitcoin has historically performed well after halvings, but also the sample size for this has been quite small.” In the meantime, bitcoin could be pressured by macro and geopolitical pressures. On Tuesday, the Federal Reserve kicked off its two-day monetary policy meeting. Investors are watching closely to see if the central bank will keep rates higher for longer. Fed Chairman Jerome Powell and other lawmakers have made recent comments that have cemented the notion that rates may not arrive this year as previously expected. Furthermore, tensions have been rising in the Middle East and Bitcoin has yet to demonstrate that it can detach from a 10% sell-off in major US stock indices. “The market is evaluating some of the rate cuts it has seen… [and] there was a kind of flight to safety because of geopolitical issues,” Alden said. “All of this puts pressure on assets that are closely linked to liquidity, including bitcoin. It’s not the only variable, but it’s a big variable, so I would expect it to probably vary in a range for a while longer. But when you look out 12 months or so, I expect to probably see greater liquidity during that period.” Devin Ryan, director of financial technology research at JMP Securities, acknowledged these pressures but re-emphasized the impact ETFs could have on the market. crypto On Tuesday, Hong Kong’s bitcoin ETFs began trading, Trenchev noted that Australia will likely follow suit and approve bitcoin ETFs later this year, and Japan, Singapore and South Korea may also join. to the movement, “further spurring bitcoin adoption around the world.” “The macro will ebb and flow — that will be important,” he said. of wealth management approving the ETF on their platforms. Basically, you are just removing a barrier for huge pools of capital to invest – that will be the biggest story.”