Market wrap: Bitcoin declines, ending volatile month
Bitcoin traded lower on Friday as price struggled near the resistance level of $ 35,000. The cryptocurrency was trading around $ 32,000 at the time of publication and has fallen by around 8% in the past 24 hours. Some analysts expect continued weakness over the weekend as a volatile month draws to a close.
- S&P 500: 4,280.7, + 0.33%
- Gold: $ 1,779.2, + 0.22%
- The 10-year Treasury yield closed at 1.531%, down from 1.492% on Thursday
Persistent concerns about regulatory crackdowns and environmental issues have weighed on the price of bitcoin in recent months. Technical charts suggest a further decline is likely as sellers react to the extreme overbought conditions since March.
In the short term, bitcoin remains in a consolidation phase between $ 30,000 support and $ 40,000 resistance. Often times, trading ranges can be difficult to navigate for some traders.
“Chinese market players have sold massively over the past month alongside the grayscale unlock schedule, resulting in increased selling pressure,” wrote Elie Le Rest, partner and co-founder of ExoAlpha, a crypto hedge fund, in an email to CoinDesk. Greyscale, like CoinDesk, is a unit of Digital Currency Group.
“With new entrants to the crypto market seeing their profits and capital wiped out by waves of selling, new entrants suffer their losses because they can no longer withstand so much negative volatility,” Le Rest wrote.
Traders are also grappling with the potential for a tightening of monetary policy in the United States this year, which could weigh on risky assets, including cryptocurrencies.
“Wall Street will have to see a few more inflation and labor reports before they can better understand when the [Federal Reserve] will go down and be on the verge of raising interest rates, ”wrote Edward Moya, senior market analyst at Oanda, in an email to CoinDesk.
“It looks like it will take increased inflationary pressures for the dollar to rally and that could pose one of the main risks for cryptocurrencies this summer,” Moya wrote.
Institutions embrace crypto
Despite short-term price fluctuations, institutions are gradually turning to cryptocurrencies.
Bitcoin trading volumes on the LMAX Digital spot exchange have increased over the past year. Because LMAX Digital “facilitates transactions for institutions only and is already a major spot bitcoin exchange, this illustrates the current institutionalization of the bitcoin market,” according to a report from Arcane Research and LMAX Digital released Friday.
The report also mentions that approximately 70% of the 77 institutional investors surveyed by LMAX Digital expect asset managers, funds and banks to be the main contributors to transaction volume over the next three years.
However, several gaps remain, which could slow the pace of widespread institutional adoption. “Access to banking was particularly emphasized by brokers, while proprietary trading companies and HFT [high frequency trading] businesses see access to credit as a major gap. In particular, companies see the lack of global regulation as a major concern, ”according to LMAX Digital.
Bitcoin’s hashrate drops
It appears that China’s regulatory crackdown has accelerated the decline in bitcoin’s hashrate over the past month. The hashrate refers to the total combined computing power that is used to mine and process transactions on the blockchain.
Bitcoin’s average hashrate fell to 104 EH / s, the lowest level since June 2020, according to data from Glassnode. BitOoda, a digital asset financial services platform, has predicted that the target hashrate will be around 105 EH / s on the next difficulty reset, which is likely to occur on July 3, while the target hashrate will drop further to 85 pE / s on the next difficulty. reset on July 19 or 20.
Chinese miners are looking for hosting sites for potential migration. “We are seeing a ton of incoming requests from China-based mining companies looking to relocate to North America and are looking to do so urgently,” Dave Perrill, CEO of the crypto mining colocation firm, told CoinDesk. Compute North.
Altcoin balance sheet
- High gas charges plagued Ethereum for months, so much so that there was a boom in funding and adoption of Layer 2 solutions like Polygon, Arbitrum, and Optimism. A new project takes a different turn and hopes to foster better communication between two groups of Ethereum stakeholders whose incentives are often misaligned: miners and users. The Ethereum Eagle (EGL) project, launched on Friday, attempts to provide a signaling mechanism for miners and the community to find the “right” balance between gas limits and block size.
- Opera, a privacy-focused web browser that has historically built in crypto functionality, incorporates its early stablecoins, including celo dollar (cUSD), celo euro (cEUR) stablecoins, and Celo’s native CELO token. Celo is an open source blockchain network aimed at making decentralized finance (DeFi) systems and tools more accessible.
Most digital assets on CoinDesk 20 were lower on Friday.
Notable losers at 9:00 p.m. UTC (4:00 p.m. ET):