Bitcoin (BTC) has regained some composure since May 25, but is likely to record its first monthly loss since December.
The top cryptocurrency by market capitalization is trading near $27,800 at press time, a 7.5% recovery from last week’s low of about $25,900. However, it is down about 5% for the month, and assuming this loss is sustained until UTC close on the 31st, it will be negative for the first month of the year. Bitcoin was positive in January, March, and April before finishing flat in February.
According to CoinDesk data, Bitcoin will lose nearly 7% against Ethereum (ETH) for the month.
Bitcoin’s Poor Monthly Performance Is As Bond Traders Renew Bet That The Fed Will Keep Rates Rising In Response To Steady Inflation And A Resilient Labor Market It’s because I let you Earlier, interest rate traders expected the federal funds rate, the benchmark borrowing cost, to fall from 5% today to below 4.5% by the end of 2023. But the market no longer expects the Fed to cut rates this year.
A rekindling of the Fed’s hawkish bets has pushed the US dollar higher this month, rising 2.7% against a basket of fiat currencies including the euro. Bitcoin tends to move in the opposite direction to the dollar.
Since the beginning of last year, capital has left the cryptocurrency market. The trend continued this month, with stablecoin market capitalization shrinking to a 20-month low of $130 billion. Stablecoins are crypto assets whose value is pegged to another asset, such as the US dollar, and have been widely used to fund the purchase of other crypto assets over the past three years.
“With the liquidity wave of lower inflation now coming full circle, we can see the market needing new drivers and themes to lift prices higher,” said head of research and strategy at crypto service provider Matrixport. Markus Thielen said. “The tech sector tends to correlate with BTC, but the former is finding new life in the AI and Chat GPT revolutions, and BTC has yet to benefit.”
Bitcoin has diverged from the Wall Street tech index Nasdaq, which has risen nearly 8% this month.
Griffin Ardern, a volatility trader at crypto manager Blofin, said the continued high interest rate environment will keep Bitcoin ahead of the curve against the bulls.
“In a high interest rate environment, no-risk high returns like money market funds are more attractive to investors, which means the lack of liquidity in the crypto markets will continue,” Ardern said.
Dick Lo, founder and CEO of quant-driven trading firm TDX Strategies, said: “Bitcoin’s 4% rise on the 28th was a temporary move by American leaders to lift the debt ceiling. A further rise may be difficult in the bailout rally triggered by the announcement of the deal.”
“The rally seen on the night of the 28th and the morning of the 29th was driven by relief after the U.S. debt ceiling deal was reached. And with the Treasury Department needing to sell at least $500 billion of notes in the near term to replenish its cash position, a potential dry-up of liquidity could weigh on risky assets. It’s going to suck,” Lo said.
We expect BTC to see strong resistance at $28,500, with initial support at $27,350 going forward, followed by a test of $26,200,” said Law. added.
｜Translation: coindesk JAPAN
｜Editing: Toshihiko Inoue
｜Original: Bitcoin Headed for First Monthly Loss in Six Months