- Bitcoin price falls again, this time under $60 000
- Bitcoin dropped significantly overnight, dropping by 11.5%
- Bitcoin isn't the only thing going down in value; other things are too
- Many signs show that Bitcoin might drop again
Bitcoin price falls again, this time under $60 000
Bitcoin had a few hot years. Its prices have reached record highs and record lows. These ups and downs were interpreted as a tough time for the ones who have been investing in this popular cryptocurrency.
However, even these predictions and interpretations were not right. Now, Bitcoin has fallen down under 60,000 as BTC's future premium drops to a five-month low. This revisit to the low point might mean that the bull market is over[1].
Bitcoin's price went down a lot on April 30 because a new way to trade it didn't do very well in Hong Kong. People thought there would be a lot of interest, but only a small amount of trading happened. This made the price of Bitcoin for future deals drop to its lowest point in five months, which could mean more people think it's not going to do well.
However, there are other reasons why Bitcoin's price might be going down. People aren't as confident in the United States Federal Reserve's plan to lower interest rates twice this year. The person in charge of the Federal Reserve, Jerome Powell, will talk about this on May 1, making people who trade cryptocurrency more careful.
Also, people are taking money out of Bitcoin investments in the U.S. because the fees are high. Even though the Hong Kong exchange had other Bitcoin investments that did well earlier this year, the new one didn't do as well as expected. Some experts think this might be because of bad timing.
Bitcoin dropped significantly overnight, dropping by 11.5%
The stock market in the U.S. is having its first bad month in six months, and people are asking for higher returns on some investments. If people think inflation is going up or if the U.S. government keeps getting more debt, they might sell their bonds, which will lower the value of the bonds[2].
Plus, Bitcoin's price going down to $60,172 on April 30 might also be because people are worried about the economy slowing down. McDonald's didn't make much more money than last year, and Volkswagen sold fewer cars in the first part of this year.
Between April 30 and May 1, the price of Bitcoin dropped significantly, dropping by 11.5% to $56,522. This caused $172 million worth of leveraged bets to be closed, though that's not very high compared to the $28.9 billion people had bet on Bitcoin before it dropped. So, it's not just a surprise for the people betting on Bitcoin to go up.
People might feel less unsure after the Fed, which is like the Bank of the United States, discusses its plans. Jerome Powell, the Fed's head, will speak after a meeting on May 1. People think the Fed will keep interest rates at 5.25%, but there's still doubt about how the U.S. government will pay for its spending.
On April 30, the interest rate on a type of bond from the U.S. government went up to 5.06%, which is the highest it's been in five months. People want more money back to make up for taking bigger risks after hearing about the government spending a lot. Since the Fed raised interest rates last year, the government has been paying 23% more in interest on what it borrows, and it's expected to keep paying more if interest rates stay high.
Bitcoin isn't the only thing going down in value; other things are too
The Russell 2000 Index, which shows how smaller companies in the U.S. are doing, fell by 8.2% over the last month, wiping out the gains it made in the previous two months. Also, the price of oil has gone down by 8.3% since April 5, when it was at its highest in five months.
One good sign that the drop in Bitcoin's price might be stopping is how well other parts of the stock market are doing. Big companies like Amazon, Microsoft, and Google have been doing well in the first part of the year. When the stock market does better, people might not be as interested in Bitcoin or other risky investments. But if the Fed decides to keep interest rates high for a while, people might look for other investments instead.
People who make new Bitcoin by solving hard math problems are finding it tough after the amount of Bitcoin they get was cut in half on April 20. But, even though they're getting less Bitcoin, they're not selling much of what they have. If the price of Bitcoin keeps going down for a few more weeks, though, they might have to sell more[3].
So, one more sign that the drop in Bitcoin's price might be stopping is that the people who make new Bitcoin aren't selling much, even though it's gotten harder for them to make it.
Many signs show that Bitcoin might drop again
Bitcoin miners are feeling the pressure after their rewards were cut in half on April 20. Now, they only get 3.125 Bitcoin for every block they make. Ki Young Ju, who runs CryptoQuant, says miners aren't selling much Bitcoin on the market right now. But if the price of Bitcoin keeps going down for a few more weeks, they might have to sell a lot of it.
Another good sign that the drop in Bitcoin's price might stop is that miners aren't selling much, even though it's getting harder for them to make new Bitcoin. Even though the Hashrate Index, which measures how hard it is to make new Bitcoin, dropped by 57%, miners are still holding on to what they have.
To understand how people feel about cryptocurrency in general, we can look at how much they want stablecoins like USD Coin in China. The extra amount people are willing to pay to get USDC instead of regular dollars can tell us whether people in China are more or less interested in cryptocurrency.
On May 1, people in China were willing to pay 2.7% more to get USDC, which suggests they're still very interested in cryptocurrency, even though the price of Bitcoin dropped by 20% over three weeks. But even though things might be looking up in other parts of the world, in the U.S., people are withdrawing money from Bitcoin investments. In the past five days, $635 million has been withdrawn from Bitcoin investments in the U.S[4].
These signs show that how much money is going into or out of Bitcoin investments is really important in deciding whether the price of Bitcoin will go up or down, and it's not clear if the $56,500 level at which the price of Bitcoin is now will stay the same.
