Bitcoin started with a small increase on Friday morning. At one point, the coin was trading at $20,865. According to the website for tracking the value of digital assets CoinMarketCap, over the past 24 hours, the minimum price of bitcoin reached $20,265, and the high – $ 22,484.
On Friday, bitcoin’s main competitor, the Ethereum altcoin, also started the trading session with an increase and by the time of writing the material had reached $1,094.
As for cryptocurrencies from the top ten by capitalization, over the past 24 hours, all coins, except for the USD Coin and Binance USD stablecoins, showed a confident negative. The sharpest drop was recorded at Solana (-11.02%).
At the end of the week, all virtual assets from the top ten, with the exception of a few stablecoins, also significantly lost in value. The main outsider here was the digital asset Ethereum (-38.66%).
According to CoinGecko, the world’s largest aggregator of data on virtual assets, over the past day, the Chain coin (+1.8%) topped the list of leaders in the top 100 most capitalized digital assets, and THORChain (-15.0%) took the first place in the drop list.
According to the results of the past week, the main outsider among the hundreds of leading cryptocurrencies was the DeFiChain coin (-48.1%), and the key favorite was cDAI (+0.9%).
Forecasts of cryptanalysts
The transition of bitcoin to positive dynamics happened only the day before on the news from the US Federal Reserve, until that moment the first cryptocurrency had been declining for eight consecutive trading sessions.
So, following the results of the two-day meeting on June 14-15, the Fed raised the key rate by 75 basis points at once – to 1.50-1.75%. There has not been such a spectacular increase in the indicator by the central bank since 1994.
As part of a press conference following the meeting of the central bank, Fed Chairman Jerome Powell said that next month the base rate level could be increased by another 50-75 basis points.
From that moment on, the cryptocurrency market began to grow steadily. At the same time, until Thursday, the main virtual asset showed a spectacular permanent decline, which became the sharpest since December 2020. Bitcoin’s active decline began on June 7, when the asset was trading at $31,500. Since then, the cryptocurrency exchange rate has collapsed by 33%.
The price of bitcoin decreased by 15.59% in May. Over the past two months, the cost of bitcoin has collapsed 1.6 times – to $29,000 from $45,800. At the same time, over the past spring, the price of bitcoin has sunk by 27%.
Since November last year, when the coin updated the historical record, soaring above $69,000, the cryptocurrency has already lost about 70% in price.
Such unpredictable behavior of bitcoin forces experts to make the most unexpected predictions about its future. The CEO of the virtual asset management company Galaxy Digital, Mike Novogratz, shared a new scenario according to which the BTC will skyrocket in price when the Fed stops raising the base interest rate.
However, not all crypto experts believe in the bright future of the digital asset market and its leader in particular. So, recently, Jeff Gundlach, CEO of DoubleLine investment company, said that bitcoin could soon collapse to the $10,000 mark after a series of recent falls that made investors seriously doubt the stability of the cryptocurrency markets.
According to Gundlach, a vivid proof of the serious vulnerability of virtual assets was the May collapse of the algorithmic stablecoin Terra USD (UST) and the digital token Luna, when the cryptocurrency market lost billions of dollars within a few weeks.
What prevents the growth of virtual coins?
Experts consider the protracted military conflict in Ukraine and market participants’ concerns about the prospects for the global economy to be the key downside factors for bitcoin in June.
An additional reason for the prolonged decline in the virtual asset market today, analysts call a decrease in investor appetite for risky assets amid the latest inflation data in the United States.
Thus, according to the US Federal Bureau of Labor Statistics, in May the inflation rate in the country rose to 8.6% in annual terms, which was the worst indicator for the past 40 years, since the winter of 1981. By the way, earlier market analysts predicted that the annual inflation rate would remain at the April level of 8.3%.
Another tangible factor of pressure on the virtual asset market was also the permanent fall of key US stock indices, in particular the NASDAQ Composite stock index.
Earlier, analysts of the investment company Arcane Research stated that the correlation of BTC and technology securities has reached a high since July 2020.
Such close parallels of bitcoin with the NASDAQ index make investors increasingly doubt the ability of cryptocurrencies to become a means of protection against inflation and worry that in the near future the BTC may become a traditionally risky asset instead of an alternative one.
And finally, an important negative signal for the market in recent years has been the forced reduction of operations by BTC miners in order to reduce losses. Today, the cost of electricity is constantly growing, and the prices of virtual assets are falling sharply, depriving crypto-miners of profits.
Traditionally, large companies have fixed energy costs. In addition, they had the opportunity to prepare in advance for a downturn in the market and provide themselves with a financial safety cushion. The combination of these factors helps major players to survive and adapt to the new reality. Thus, the strongest impact is now being taken by small organizations that risk becoming victims of acquisitions.
Against this background, miners are actively engaged in reducing their stocks of cryptocurrencies, with the help of which they cover the growing costs. So, according to the latest data from the bitcoin block browser Blockchain.com, the hashrate of the first cryptocurrency has dropped by 4% since the beginning of this week. This indicates that bitcoin miners have reduced the computing power required for the operation of the blockchain.
At the same time, the total revenue of bitcoin miners has fallen to the lowest levels in the last 12 months. Today, experts in the extraction of virtual assets are massively withdrawing cryptocurrency to exchanges. The day before, the net volume of BTC sent to exchanges updated the historical high in dollar terms and soared to $1.94 billion. Crypto experts believe that in the near future such a large-scale liquidation of positions may cause another loud collapse of the digital coin market.