BTC, Altcoins Seek Direction Before Miami Conference
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The crypto markets changed direction again after a brief relief rally. Just ahead of the start of the Bitcoin Conference in Miami, scheduled to last for two days, BTC started to slide back below $37,000. BTC is currently preserving its premium on the Bithumb Korean exchange, still trading above the equivalent of $38,000 against the Korean Won.
The price equivalent of the Grayscale Bitcoin Trust is also currently a bit below the market, showing weaker demand from retail traders that choose an indirect BTC investment.
Grayscale prices are a proxy gauge of BTC sentiment, and sometimes trade at a premium to spot or futures prices. Ahead of the weekend, Binance futures trading and the USDT dollar-pegged coin remain one of the most important sources of price discovery for BTC.
The effect of the conference over the weekend is also unpredictable, though there are expectations the event may trigger another upward move for digital assets after new announcements from developer teams.
One of the reasons for the drop was the expectation for another low-volume weekend where prices may continue to sink further. BTC is still in direction-seeking mode, and markets remain at lower levels of leverage compared to previous runs.
BTC holds on above the $35,000 level, with some expectations that the recent price run has ran out of energy. Altcoins also retreated, losing about 10% overnight.
At the same time, indicators from on-chain analysis suggest the usage and adoption of digital coins continues, as even the current price levels were unthinkable only a year ago.
BTC, however, is also perceived as a buying opportunity at the moment, based on models of long-term appreciation. The asset has also shown the potential to recover positions quickly, even after a damaging weekend. Still, BTC is yet to regain the $40,000 level and remain above that range.
Did Elon Musk Harm BTC
The recent BTC slide follows a cryptic tweet by Elon Musk, tech king of Tesla. BTC trading is highly sensitive to social media messages, and Musk’s tweet was interpreted as pessimistic.
At this price range, is is possible that some of the BTC acquired by Tesla, Inc. or by Musk personally may be underwater. Some investors are bracing for a potential sale of some of those holdings to further depress market prices. For now, the recent tweet only exacerbated a general trend of price weakness.
For BTC, weekends have been a time of anomalies, as previously prices would rally on low volumes. Now, the pattern is reversed, with prices shaken down over the weekend, and recovering again mid-week.
Musk has been known for his support of Dogecoin (DOGE), the meme-based asset which expanded to unprecedented highs in 2021. But even DOGE sank overnight, shedding about 15% from its price to stand at around $0.37 after the start of Coinbase Pro trading.
Ownership Profile May Shift
Despite the trading volume of $37B and above per day, BTC spot markets are sensitive to rapid selling from “whales”. In the past weeks, there were indications of a shift in ownership, while some underlying trends suggested long-term potential for more price growth.
OTC selling slowed down in 2021, as demand outpaced supply.
The trend also indicates miners are holding onto their coins and not selling for now. At recent prices, most miners have a cost per BTC at lower than $10,000, with no pressure to sell the newly mined coins.
Ransomware FUD Hurts Prices
The recent news of ransomware demands on large US-based industrial giants has put some negative focus on Bitcoin’s network. BTC payments for encrypted files is a suggestion that cryptocurrency may be an enabling factor in ransomware attacks.
The US Department of Justice has signalled it may give ransomware attacks the same priority as terrorism. This move would link BTC to potential financing for terrorism activities and possibly demand further regulation. But the recent price drop may just be a short-term reaction. BTC trading is currently highly regulated, requiring a full documented profile on most cryptocurrency exchanges.
Altcoins Remain Attractive
Despite the short-term losses, altcoins remain an attractive market with significant price moves. Some of the assets, especially linked to DeFi, are highly active and quickly recover the lost positions.
Filecoin (FIL), despite being far from its peak above $200, has now regained 24% overnight to $88.28.
An older altcoin, Verge (XVG), will get higher liquidity on Binance with its new XVG/USDT pairing. Trading is expected to start on June 6.
XVG is one of the altcoins that overheated in late 2017, and has not yet repeated its previous highs. XVG currently trades at $0.02, solidly above the sub-penny range during the bear market.
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