3 - 5 minute read
May gray has turned into June gloom for cryptocurrency markets as prices have dipped slightly into the red. Bitcoin, the largest cryptocurrency in terms of market capitalization, was recently trading at around $26,950, down 0.5% over the past 24 hours. This marks the second consecutive day that BTC has dropped below $27,000. The downward trend from May carried over, with bitcoin’s price dropping almost 4% and breaking a four-month streak of gains.
Bitcoin had soared more than 60% from January, reaching about $31,000 at one point in mid-April, as crypto regained its luster as a safe-haven asset following a string of U.S. bank failures that raised concerns about traditional finance. However, the market has yet to recover and has been relatively muted, with the broad CMI down about 2% to 3%.
Todd Groth, CoinDesk Head of Index Research, notes that “anytime you have an asset that has significant volatility such as cryptocurrency, any real monthly move that is under a safe flat fee of 5% is relatively muted.” Groth is optimistic that markets have recently priced in a resumption of more hawkish monetary policy after hopes rose in early May amid encouraging signs that inflation was waning enough to allow the U.S. central bank to halt its nearly year-long campaign of interest rate increases.
Ether, the second-largest cryptocurrency in market value, was recently trading at about $1,870, up slightly from Wednesday. Other major digital assets were mostly down, albeit not by much, although litecoin was an exception as it recently rose more than 7% with investors seemingly buoyed by the network’s halving in two months and a jump in activity in May.
The CoinDesk Market Index, a measure of crypto market performance, recently sank 0.4%. Meanwhile, stocks rose a day after the U.S. House of Representatives passed a bill to raise the debt limit, ensuring the government could meet its financial obligations at least for the near-term and avoid a shutdown.
Leo Mizuhara, CEO of institutional crypto management platform Hashnote, wrote that crypto markets had “dodged a bullet, thanks to the resolution to the debt ceiling crisis and a growing embrace of digital assets in Asia, particularly in Hong Kong, which has been trying to create easier access for retail investors. But he added that he is “not expecting a huge breakout for Bitcoin at the moment.”
The Bottom Line
The recent dip in cryptocurrency prices, particularly bitcoin, reflects a broader trend from May when bitcoin’s price dipped almost 4% to break a four-month streak of gains. While markets have yet to recover, the resumption of more hawkish monetary policy has been priced in, offering some hope for the future. However, traders must remain cautious, particularly with the ongoing difficulties facing the crypto industry in the United States. Despite the challenges, the growing embrace of digital assets in Asia, particularly in Hong Kong, may offer some opportunities for growth in the future.
