At the beginning of the week, Bitcoin price was well above $30,000 and Ethereum was close to $1,900. The crypto market has started the new trading week mostly in the green. But the bear market in crypto, including BTC, SHIB, and ETH, is not over, and here are the signs to watch.
That’s the whole story this year!
The world’s two largest cryptocurrencies benefited from some risk-based sentiment on Monday after China relaxed Covid-related lockdowns. Bitcoin was last at $29,913, up 3.88% on the day. And Ethereum is down 3.64% on the day to stay at $1,781. Ben McMillan, founder and CIO of DX Digital Assets, said in a statement:
The whole story this year has been one of trading Bitcoin with other risk assets. It is no different today. The market has seen the news from China as positive as it relates to the reduction of quarantines in Shanghai. Risk markets took an offer and Bitcoin, Ethereum, Shiba Inu and other digital assets followed.
There is a critical sign that the crypto space is still in a bear market
However, there is a critical sign that the crypto space is still in a bear market. This is because of the low prices, Bitcoin miners dumping their long-term holdings to cover the rising costs.
According to Coin Metrics data analyzed by Compass Mining, miners transferred more than 195,000 Bitcoins to exchanges in May. This marks the most significant increase of the five months e. The total sold was approximately $6.3 billion compared to Bitcoin’s average price of $32,000 in May.
Regarding bitcoin price, this has contributed to some selling pressure which has offset some of the long-term buying we’ve seen. Therefore, the price is trading in this relatively narrow range. McMillan says there is some sort of contention between miners who sell and long-term holders who buy.
McMillan: While many Bitcoin miners are trading between $28,000 and $33,000 on margin
, analysts don’t think the miners will put more selling pressure in June. McMillan says:
When Bitcoin is $60,000, miners can get away with higher cost electricity. But when Bitcoin hits $30,000, the costs of your electricity and hardware start to matter much more. Many miners are on the margin and simply cannot compete at lower Bitcoin levels. So they may have to consolidate or go out of business. Miners with better technology or cheaper electricity will be able to circumvent this.
McMillan continues his observations as follows: Mining activities have always been interesting when identifying bear and bull markets. The sweet spot was between $25,000 and $30,000. Well below that and you’re starting to see significant mining capacity go out.
“Investors are looking pretty closely at inflation figures”
This sell-off in crypto assets has been a washout this spring. However, the most important driver that will mark the end of the bear market will be risk sentiment returning to the market. And McMillan warns that that may not happen until September. He points out that this is when markets are looking for signs that the Federal Reserve may slow down its aggressive tightening path. McMillan explains his views this way:
The key to any sustained price action is more demand coming from the edge. Because you want to see a positive macro catalyst for prices. But we still need risk. The truth is, this macroeconomic environment is still pretty pessimistic. All eyes are on the Fed, especially to see which path they will follow at the September meeting. And quantitative tightening begins this month. Investors want to see any signs of inflation reversing. For this, they still take a very close look at inflation figures.
Markets, which we have covered in Cryptokoin.com news, expect the Fed to increase interest rates by another 50 basis points at its June and July meeting. What’s still unclear is the September meeting, which will depend heavily on data.
“Don’t get excited until Bitcoin hits $33,000!”
Crypto trader Scott Melker says Bitcoin investors have nothing to be excited about until the price rises above the $33,000 level:
Last Monday, the price made a similar upward move. It got many people on the rise for no apparent reason. The price is located below key resistance near $33,000. However, it is still sideways above the key support at $28,600. A move above or below these levels is worth discussing. Everything else is noise. We are still in a bear market until we get higher.
According to GlobalBlock analyst Marcus Sotiriou, after Monday’s rally, Bitcoin faced strong resistance between $31,500-32,000. The analyst states that investors can expect a higher movement if these levels continue.
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