After 4 consecutive months in the green, Bitcoin (BTC) is likely to end May on a red candle. Technical and psychological resistance to the $30,000 mark, as well as immediate monetary uncertainty in the United States, will have had the better of the uptrend that began in December 2022. What is the outlook for Bitcoin and the market?
Bitcoin: “Sell in May and go away “
Once again, the stock market adage “Sell in May and go away” is giving the bearish camp something to cheer about. Unless the market’s leading cryptocurrency closes above $29,200 on Wednesday 31 May, it is likely to experience its first month in the red since the start of 2023. At the time of writing, Bitcoin (BTC) is trading at around $27,600 and has had another day of very little volatility.
After a meteoric rise of 77% in the space of 4 months, from $16,500 on 1 January to $29,200 on 30 April, BTC is taking a breather and is currently correcting by 5% over the month of May 2023. The psychological and technical resistance of $30,000 has slowed the bullish breakthrough begun by the cryptocurrency market since the new year.
The price of Bitcoin (BTC) is falling back in May 2023
By contrast, Ether (ETH) is poised to post a fifth month in the green. In the wake of the success of the Shapella update, the market’s second-largest cryptocurrency is currently printing a timid – but appreciable – 1.78% in the space of a month. Over this period, the BTC/ETH pair is down 7%.
An unfavourable macro-economic context
Since the beginning of 2023, the macro-economic context has forced the US Federal Reserve (FED) to tighten its monetary policy. While the market was expecting the FED’s key rates to pivot downwards in May, Chairman Jerome Powell explained that inflation was far from over and that monetary policy could remain restrictive for many months to come.
Added to this are the fears surrounding the debt crisis, which is pitting Republicans against Democrats. In short, if the public debt ceiling is not raised, the United States will no longer be able to meet certain interest payments. Although this situation has finally been resolved through a temporary agreement, a wave of panic has refreshed the ambitions of the cryptocurrency market.
Nevertheless, this news, which is seen as positive by investors, in no way erases the more global problems facing risky stock markets, including the cryptocurrency market. As you are no doubt aware, it is the FED that blows hot and cold, the main indicator being key rates.
On this subject, some members involved in the US Federal Reserve’s key decisions have spoken out in favour of yet another rate hike over the summer. In their view, the long-awaited pivot – signifying a recovery in the markets – would not arrive until early 2024. So, what colour will the June candle be?
