Bitcoin’s price continues to slide: Is the bull run over?

Posted: 31 May 2021 5:16 pm
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Over the course of May, Bitcoin has lost more than 40% of its value.

  • Experts suggest that following this latest round of consolidation, Bitcoin's value may be faced with even more corrections.
  • A number of institutional players including MicroStrategy and Ark Invest have continued to "buy the dip" in recent weeks.
  • Since last month, more than AUD$15.5 billion worth of Bitcoin futures long positions have been liquidated.

The last couple of weeks have not been pleasant for Bitcoin, or for the cryptocurrency market in general, with the flagship digital asset recording losses of more than 25%. Not only that, since the start of the year, BTC's market dominance has been dwindling fairly rapidly, dropping from 70% to just over 41%. At press time, the currency is trading at AUD$44,800.

To make sense of all this ongoing volatility, Finder reached out to Johannes Schweifer, CEO of blockchain firm CoreLedger as well as co-founder of several blockchain start-ups, including Bitcoin Suisse. In his view, the pure network tokens like BTC and ETH are the ones that have been on the receiving end of the highest volatility over the past week, adding:

"The value of most cryptocurrencies is based on their security and resilience against attacks, and the demand to get transactions processed in the network. Those who have a long-strategy are not deterred by the pullbacks. The drop we have seen in other tokens when Bitcoin drops is just an effect of entanglement. But the reality is that tokens differ, and this latest consolidation phase has paved the way for appetite around more stable assets - not just stablecoins, but asset-backed tokens, securities or other non-financial assets."

Similarly, despite most people continuing to focus solely on Bitcoin's currency price action, Kadan Stadelmann, chief technical officer for Komodo, an end-to-end blockchain infrastructure solutions provider, pointed out to Finder that following all the recent dips, the market seems to have rebounded in a major way. "MicroStrategy continues to add more BTC to its balance sheet, along with a new purchase announcement from Ark Invest. Indicators show that several whales bought last week at US$43k per BTC or lower," he added.

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Will Bitcoin continue to bottom out?

Just a few months ago, many cryptocurrency analysts claimed that Bitcoin had safely secured the US$50,000 price mark and that it was only a matter of time before the premier cryptocurrency breached the all important US$100,000 barrier. However, as things stand, it seems as though BTC may not only continue its ongoing descent but fall even further in the coming few weeks. In this regard, some independent experts believe that as per derivatives and on-chain data signals, further corrections may be looming on the horizon for Bitcoin.

That said, it should be noted that a number of traders have been trying to time the much-anticipated trend reversal for quite some time now, especially after the cryptocurrency forged a 48% correction to AUD$39,000 on 12 May. As a result of the development, more than AUD$15.5 billion worth of futures long positions have been liquidated and even trader confidence seems to have been shaken.

In closing, despite Bitcoin's dwindling monetary price action, it bears mentioning that over the course of the last 30-odd days more than 2.2 million BTC tokens have been used for facilitating transactions, which is the most activity that the digital asset has seen in over 6 months.

Interested in cryptocurrency? Learn more about the basics with our beginner's guide to Bitcoin, dive deeper by learning about Ethereum and see what blockchain can do with our simple guide to DeFi.


Disclosure: The author owns a range of cryptocurrencies at the time of writing

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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