What Will End of May Candle Bring for Bitcoin (BTC)
Bitcoin (BTC) enters the final stretch of May’s sideways movement, after April’s red candle dragged down the market. For now, the probability is for another close with a loss, possibly setting the mood for the coming months.
In the second quarter, BTC will face more interest rate decisions from the US Fed, as well as unpredictable inflation and macro data. The next Fed Open Market Committee meeting may affect BTC in the coming days, though with no certainty on swaying the currently stagnant prices.
BTC has set expectations for spending months with sideways trading. The leading coin dominated 44.7% of the total crypto market cap, while hovering above $29,780.30 on May 26.
BTC markets show a readiness to wait out for the long term, but coupled with diminished short-term bullishness. Trading sentiment remains at 11 points signaling extreme fear, one of the longest stretches at the low side of the Crypto Fear and Greed Index.
BTC trading continues to be choppy, inviting extreme caution especially with leveraged positions. The next question for BTC is which support levels would hold, and if the asset could return to the lows of 2021.
Enthusiasm for corporate buying may also be diminished, with the potential to attack positions where known actors bought BTC. Not even the president of El Salvador Nayib Bukele has signaled more buying behavior.
At the same time, holding behavior continues to be strong, especially for coins older than five years. Even with fluctuations, there are wallets that are either forgotten, or have a longer time horizon.
This time, altcoinsb are not so lightly used as a source of higher income. Those assets rallied during a more bullish season, but showed they could quickly erase value in weeks during a downturn, remaining much riskier than BTC.
For the Bitcoin network, the on-chain metrics are mixed. Activity has remained low, with few movements to and from exchanges. Buyers may be waiting on the sidelines for a lower entry point, while also not selling at the current price range.
Lightning Network, however, keeps growing, with more than 3,900 BTC locked in the channels. Lightning transactions start to be accepted by some exchanges like Kraken, as a faster way to move coins. Those transactions use known nodes, but still do not require KYC for users. Exchange policy on KYC may vary on Lightning Network funds.
USDT Outflows Stop, Supply Stabilizes
For now, the outflow of funds from Tether (USDT) has stopped, leaving the supply at 72.3B tokens. In the past, even a smaller supply has managed to lift the markets when attitudes turned bullish again.
Despite the bear market, there are also signs that projects keep building, looking for more robust ways to store value. Even with current price slide, most decentralized projects have managed a more gradual decline, instead of the stressful liquidations due to automated smart contracts in the past.
USDT on-chain activity has also diminished, after a recent spike due to fears of losing the dollar peg. USDT tokens still hover at $0.99, giving a slight premium to some of the BTC markets. Overall, the premium is limited to around $50, not signaling any significant panic or disparity.
Exchange inflows and outflows also match the lowered activity and are not a strong signal for market direction.
Terra 2.0 is Coming After Proposal 1623 Passes Voting
The Terra community decided on relaunching with a new blockchain, which will start accruing value from zero. After burning hundreds of millions of old LUNA, it is still uncertain what the new asset will reflect in terms of value. After days of voting, Proposition 1623 was accepted, setting the way for a new blockchain.
The new blockchain will not start from scratch, but use a snapshot of holdings from before the crash. All previous owners will receive LUNA, the new chain’s asset. The old asset will be renamed Luna Classic and it may be up to exchanges to decide its future fate.
Rough estimates found around 100K investors in Terra in South Korea alone. Those investors may not receive a 1:1 new LUNA reimbursement, but the rewards will be sent out based on a ratio of pre-crash and post-crash holders from multiple network records. Large-scale wallets and the LFG LUNA Classic balances will be removed from the snapshot and reimbursement program. This time, Terra will not support an algorithmic stablecoin, or link to the old UST, which may be delisted soon.
UST, the old stablecoin, trades around $0.08 with big daily fluctuations. Exchanges may start to remove the asset, which still has more than 11B tokens in circulation.
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With over 50 coins and an obsession with security, Kraken is one of the safest places to buy and trade crypto.
Kraken has a good reputation for security and protection of your funds and operates across the USA (except NY), Canada, the EU and Japan
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