The only constants in the crypto industry are uncertainty and volatility. Once again, as the price of the world's most valuable cryptocurrency – bitcoin (BTC) – fell below the critical $37,000 level, bulls took a back seat, while bears appeared to cheer.
$40,000 – a distant dream no longer?
BTC's price briefly challenged the psychological barrier above $40,000 on May 4 amid expectations of a breakout over that level. However, such gains were just ephemeral, and on May 5, the king coin and the broader crypto market suffered a wave of losses.
After bouncing near the $1.7 trillion barrier, the global cryptocurrency market capitalization plummeted to $1.69 trillion, a decrease of 3.90 percent in the 24-hour period since the time of writing.
Notably, in tandem with BTC's plunge below $37,000, the majority of the biggest altcoins, including ETH, BNB, SOL, and ADA, saw their daily and weekly time frames painted in red.
BTC's price has been stuck in a relatively narrow range with little meaningful price action, while the top crypto's price has risen sharply in response to a weakening US dollar and stronger stock indexes, but the rally has been short-lived.
Analysts noted that around $82 million was lost in two hours in bitcoin long liquidations, with nearly $63 million lost in only one hour. The market's prolonged liquidations were suggestive of the bearish wave that appeared to overwhelm BTC's charts.
After bouncing near the $1.7 trillion barrier, the global cryptocurrency market capitalization plummeted to $1.69 trillion, a decrease of 3.90 percent in the 24-hour period since the time of writing.
Notably, in tandem with BTC's plunge below $37,000, the majority of the biggest altcoins, including ETH, BNB, SOL, and ADA, saw their daily and weekly time frames painted in red.
BTC's price has been stuck in a relatively narrow range with little meaningful price action, while the top crypto's price has risen sharply in response to a weakening US dollar and stronger stock indexes, but the rally has been short-lived.
Analysts noted that around $82 million was lost in two hours in bitcoin long liquidations, with nearly $63 million lost in only one hour. The market's prolonged liquidations were suggestive of the bearish wave that appeared to overwhelm BTC's charts.
Bitcoin fell to its lowest level in two and a half months on Thursday, as markets continued to digest the Fed's 50 basis point rate hike on Wednesday. At the moment, rate futures indicate a 75% probability of a 75 basis price hike in June.
At yesterday's Federal Open Markets Committee (FOMC) meeting, Federal Reserve Chairman Jerome Powell announced the first rate hike of 0.5 percent since May 2000, paving the stage for additional 50 basis point increases later this year.
The price of BTC went as low as $36,520. With bitcoin price breaching the lower support level of $37,200, market investors appeared to view the $40,000 level as a faraway short-term fantasy. Thus, what did on-chain indications indicate regarding the direction of BTC?
The number of active addresses on a network indicates the network's vitality; for BTC, the change in new addresses and active addresses was negative, indicating a lack of fresh participants.
The change in new addresses during the last seven days was -14.95 percent, active addresses decreased by over 10.42 percent, and zero balance addresses decreased by 23.71 percent.
Additionally, prior to Bitcoin's slide below the $37,000 level, a short-term sentiment analysis conducted by Crypto Quant researchers indicated a favorable continuance of the present Funding Rate, indicating a predominance of long-position traders and a readiness to finance short traders.
Additionally, a significant increase in the Fees per Transaction (Mean) suggested an increase in transfer demand. However, there was concern about the effect on prices when demand for this transfer subsided and the price fell below the $37,000 mark.
For the time being, Global In/Out of the Money for Bitcoin indicated that bitcoin breached a critical support level at $38,670, where 2 million addresses together hold over 1 million BTC. In the short term, BTC needs to quickly retake $38,670 as support to prevent these addresses from liquidating portion of their holdings, as the next crucial support level is $28,500.
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