$60,000 Collapses... Optimism Amid Positive News, Yet Pessimism Persists [Bitcoin Now]

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Last week, as net outflows continued from Bitcoin spot exchange-traded funds (ETFs), the price of Bitcoin plunged to $56,500, the lowest level since the end of February. Although concerns over a potential U.S. interest rate hike have eased, leading to a partial recovery in price, the shock of breaking below $60,000 is expected to persist for some time. Some analysts have even suggested the possibility of a further decline to the $50,000 level.

According to the global cryptocurrency market tracking site CoinMarketCap, as of 9:40 a.m. on the 4th (Korean time), Bitcoin was trading at $62,957.27, up 7% from the previous day. Compared to a week ago, it was down 0.62%, and compared to a month ago, it had fallen 4.81%. Over the past year, it has recorded a gain of 117.26%.

Bitcoin prices remained above $62,000 until the 30th of last month but experienced significant volatility on the 1st of this month. The price dropped to a low of $56,500 in the early hours of the 2nd, marking the lowest level since February 27. This was due to massive outflows from Bitcoin spot ETFs. According to foreign media reports, the amount withdrawn in a single day reached $563.7 million, equivalent to approximately 766 billion Korean won.

Bitcoin prices began to attempt a gradual rebound from the afternoon of the 2nd. On the 1st (local time), the U.S. Federal Reserve (Fed) signaled at the May Federal Open Market Committee (FOMC) meeting that Chairman Jerome Powell ruled out an interest rate hike, which is believed to have eased market concerns. Chairman Powell dismissed the possibility of a rate hike, stating, "The likelihood is low," and "The Fed's next rate decision will not be an increase." The U.S. benchmark interest rate was also held steady in May as expected by the market.

Block's Q1 2024 Shareholder Letter. Photo by Homepage Capture

Additionally, the cryptocurrency exchange Coinbase, listed on the New York Stock Exchange, is expected to report first-quarter revenue of $1.36 billion, which positively influenced the market. Last quarter’s revenue was $954 million. Earnings per share (EPS) are also projected to increase from $1.04 last quarter to $1.15 this quarter. Furthermore, Block, founded by Twitter co-founder Jack Dorsey, announced in its first-quarter shareholder letter that it will use 10% of the monthly revenue generated from Bitcoin products to purchase Bitcoin, which also acted as a positive factor. Block, established by Jack Dorsey in 2009, is the parent fintech group company and is listed on the New York Stock Exchange.

However, there are negative views that downward pressure has generally intensified in the market. On the 1st, the crypto-specialized media The Block exclusively reported that global investment bank Standard Chartered (SC) stated in an email comment that with the recent breakdown of the $60,000 level, Bitcoin prices could fall further to the $50,000 range. Analyst Jeff Kendrick noted, "With Bitcoin falling below $60,000, the possibility of it reaching the $50,000 to $52,000 range has opened up."

The reasons cited for Bitcoin’s price weakness include outflows from the spot ETF market and macroeconomic trends. It was pointed out that while outflows continue in the U.S. ETF market, the newly introduced Bitcoin and Ethereum spot ETFs on the Hong Kong Stock Exchange have not gained traction. External factors mentioned include high inflation rates in the U.S. and the resulting low likelihood of a rate cut. Analyst Kendrick advised, "If Bitcoin falls to the $50,000 to $52,000 range or if the U.S. Consumer Price Index (CPI) to be announced on the 15th is favorable, consider re-entering the market."

According to the cryptocurrency data provider Alternative, the Fear & Greed Index, which measures investor sentiment, stood at 67 points (Greed) as of that day. Last week, it was also 67 points (Greed). Alternative’s Fear & Greed Index ranges from 0, indicating extreme fear and pessimism about investing, to 100, indicating strong optimism.