Bitcoin’s price crashed between April 30 and May 1, with its price decreasing by 11.5% to $56,522. This downturn triggered $172 million in leveraged long position liquidations. However, some analysts believe that investors are in a holding pattern until Jerome Powell, chair of the United States Federal Reserve, concludes his speech following the two-day monetary council meeting on May 1.
Here are three signs that suggest Bitcoin’s price correction may be reaching a bottom:
- Uncertainty may drop after the Fed minutes publish
The Fed is widely expected to maintain interest rates at 5.25%. However, there is considerable skepticism regarding the U.S. Treasury Department’s ability to finance the government’s budget. If the Fed decides to maintain higher rates for an extended period, traders may seek alternatives, such as Bitcoin.
- Bitcoin miner capitulation fears unfounded
Bitcoin miners are under significant strain after the April 20 halving, which reduced their rewards by 50%. However, estimates of miners’ outflows to exchanges show no signs of capitulation “for now,” according to Ki Young Ju, CEO of CryptoQuant.
- Strong crypto influx in China
Examining the demand for stablecoins in China, particularly for USD Coin (USDC), can be enlightening. The premium on USDC transactions over the official U.S. dollar rate offers insight into retail investors’ activities. On May 1, the premium for USDC in China increased to 2.7%, signifying a robust demand for converting the Chinese yuan into USDC.
The situation in U.S. markets shows a different trend, with net outflows from U.S.-listed spot exchange-traded funds amounting to $635 million in the past five trading days. Such findings suggest that investment flows are crucial in determining Bitcoin’s price movements, with no certainty that the $56,500 support level will hold.
While the future of Bitcoin’s price is uncertain, these three signs suggest that the bottom may be near. Investors should conduct their own research and be cautious when making investment decisions.
Sources:
- Cointelegraph.com, “3 signs hint that Bitcoin price is nearing a bottom,” Marcel Pechman, May 01, 2024.
- OKX.com, “USC Coin (USDC) peer-to-peer trades vs. USD/CNY.”
Note: Investing in cryptocurrencies is risky and should only be done after thorough research and consideration of personal financial circumstances. This article is not investment advice.
