Bitcoin’s declining price is having a ripple effect on the wider cryptocurrency market, with BTC experiencing a 4.52% drop in the last 24 hours, and ETH following suit with a 4.10% decrease. Currently valued at $26,289, Bitcoin has reached its lowest point since March 14 of this year when it briefly dipped to $26,544.
The reasons behind the substantial pullback of Bitcoin’s price are multifaceted. Surprisingly, on Wednesday, May 10, positive news emerged as the Consumer Price Index (CPI) continued to decline, causing Bitcoin’s price to surge as high as $28,317.
However, the market was soon shaken by false reports of a massive sale of 9,800 BTC by the U.S. government. This misinformation resulted in a flash crash of the Bitcoin price, from which it has struggled to recover. Yet, this narrative only tells part of the story.
Unsurprisingly, uncertainty prevails in the Bitcoin and cryptocurrency market. The Dollar Index (DXY) currently hovers above a historically critical support level of 101.8. Since early April, the DXY has remained precariously close to this support level, managing to repel bearish attacks thus far.
Another blow to the crypto market occurred on Tuesday with the news of Jump and Jane Street’s withdrawal from the U.S. crypto market. These major market makers cited regulatory ambiguity in the United States as the driving force behind their decision.
Bitcoin has previously grappled with liquidity issues, which may now worsen. Low liquidity is likely to result in heightened volatility as significant buy and sell orders swiftly impact the market.
Adding to the prevailing uncertainty is the congestion of the Bitcoin blockchain caused by Ordinals and the controversial BRC-20 meme coins. Some members of the community view these coins as a distributed denial-of-service (DDoS) attack. While approximately 300,000 transactions remain unconfirmed in the mempool, the issue is gradually improving.
The popularity of Bitcoin Ordinals transactions is diminishing, with trading volume declining for three consecutive days after reaching an all-time high of $18.13 million on May 8. Yesterday, trading volume plummeted to $4.86 million, and the number of transactions dropped from 17,000 to 6,000. UniSat’s market share has also decreased from 80-90% to 50-60% at present.
Lastly, unconfirmed rumors (fear, uncertainty, and doubt – FUD) are circulating concerning Binance US and Grayscale. Binance US has drawn attention in recent days due to a high price premium displayed by Bitcoin. Speculation abounds regarding the reasons behind this phenomenon.
Grayscale is currently the subject of heated debate, as it allegedly owes bankrupt crypto lender Genesis Trading approximately $575 million, with the loans becoming due next week. Rumors suggest that Grayscale may need to sell assets on Coinbase to generate the necessary capital for loan repayment.
As of now, the Bitcoin price remains at $26,289, finding initial support from the 100-day EMA.
