- Bitcoin was trading at roughly $25,700, down over 5% from the previous day.
- Ethereum’s price fell below $1,800, down more than 5% from the same time on Sunday.
- Other major cryptocurrencies on Monday followed a similar course as bitcoin, with the majority of their losses occurring in the hours after the SEC lawsuit
- Both SOL and BNB recently saw a more than 10% decline.
- XRP has just seen a price increase, pushing the price past the $.50 threshold.
- In June, the market will be focused on the CPI inflation data(13th June) as well as the highly anticipated Fed policy meeting on 14th June..
Following news that the SEC has sued Binance in a US district court, Bitcoin and a number of other cryptocurrencies suffered losses. The United States Securities and Exchange Commission (SEC) filed a lawsuit against Binance in a U.S. district court for unregistered securities activities, prompting a significant sell-off in bitcoin and other cryptocurrencies. Because traders could want to wait a few days until more information is available, this lawsuit might postpone the rebound in Bitcoin and the majority of major altcoins. The Federal Reserve meeting on June 14 is another approaching event that can deter investors.
On May 26, the S&P 500 Index (SPX) broke through and closed above the overhead barrier of 4,200. The U.S. Dollar Index (DXY) recovered from the 103 level. The bulls will attempt to raise the price over the nearby barrier at 104.35. This is a crucial milestone to keep an eye on since a break above it might signal the beginning of a fresh uptrend.
Bitcoin’s inflation rate:
Bitcoin’s price has risen dramatically in the months after past supply halvings, leading some to believe that there is a cause-and-effect link. This may be true, but it is debatable whether such a modest change in the supply of new Bitcoins could have such a huge effect. Given the degree to which Bitcoin has momentum, it is likely that a little alteration in the supply-demand balance may cause a price gain that investors will follow, culminating in a bubble. With more than 90% of Bitcoin (BTC) in circulation, the asset’s inflation rate has declined dramatically over the years, outperforming the US dollar (USD) by at least three times. The falling inflation rate of Bitcoin is due to the cryptocurrency’s fixed supply of 21 million BTCs. During the halving event, the rate falls every four years. As a consequence, the inflation rate of the first cryptocurrency has been steadily declining since its creation in 2009, now standing at 1.8+%. At the same time, the US dollar’s annual inflation rate in 2023 is 6.4%. In 2021, the value reached a high of 7%.
The capacity of Bitcoin to record a low inflationary rate is due to the asset’s deflationary architecture. As a result of the design, the inflation rate falls after halving occurrences. Bitcoin payouts for miners are cut in half during the halving event. This implies that the quantity of Bitcoins created via mining has been halved, with the next event scheduled for May 2024.
Bitcoin Price Analysis:
Bitcoin has been trading inside the structure of a falling channel for a few days. On May 28, the bulls pushed Bitcoin above $27,812, but the long wick shows that the bears sold the rise. The price went down and fell below $26,500, which was the nearest support. The number of people selling increased, and the BTC/USDT pair fell into a key support area between $25,750 and $25,400. Buyers should do everything they can to protect $24,719 because if it goes down, it could lead to cascading long liquidations. Then, the pair could fall to $21,357.
The bearish thesis will be proven wrong if the price goes above $27,812 and stays there for a while. This will be the first sign of strength. Until then Bitcoin can tap the $24,719 level.
Concluding Thoughts:
Crypto markets have suffered in recent weeks due to uncertainty about the US government’s capacity to raise the debt ceiling and pay its financial commitments, as well as inflationary fears. House members eventually approved the measure late Wednesday, thanks to a bipartisan effort that overcame significant opposition from far-right Republicans. Meanwhile, the Chinese economy’s projected resurgence halted, at least momentarily, as the official manufacturing purchasing managers index fell. The United States Securities and Exchange Commission (SEC) filed an action against Binance in U.S. district court for unregistered securities activities, causing a major sell-off in Bitcoin and altcoins. This lawsuit may postpone the rebound of Bitcoin and most other altcoins, as traders may opt to sit on the sidelines for a few days until some clarification emerges. Another major event that may keep investors at away is the Federal Reserve’s meeting on June 14. While the halving might offer Bitcoin with a boost over the next 1-2 years. Given the stress on the banking sector, the course of liquidity is somewhat unknown, but it is probable that liquidity will continue to drop while the government empties the TGA and the Fed maintains QT. Given that liquidity looks to be driving the market at present, this is expected to put pressure on Bitcoin’s price.
