Bitcoin‘s price recently approached the $60,000 support level as it faced the post-halving “danger zone,” causing concern among investors.
On May 10, data from Cointelegraph Markets Pro and TradingView highlighted Bitcoin’s intraday lows reaching $60,190 on Bitstamp.
The cryptocurrency experienced a sharp decline from around $63,000, sparking varied speculations about the cause of this drop.
Trader Skew, discussing the market dynamics on X (formerly Twitter), pointed out, “Monthly open has been swept again as well monthly buyers taken out.
“If bulls want higher & want to break this downtrend its here imo,” indicating a critical juncture for Bitcoin bulls around the $60.8K to $61K range, which he identifies as a key area for potential bullish action.
Material Indicators, a trading resource, suggested that large-volume institutional players might be influencing the market, speculating, “that some institutional entity may not want to see Bitcoin breakout over the weekend while the BTC ETF market is closed,” reflecting concerns over market manipulation during off-hours.
An analysis of the order book on Binance showed a new sell block around $62,500, which was predicted to possibly adjust post-weekly close.
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Material Indicators further speculated, “I won’t be the least bit surprised if this sell wall moves lower to push price down.
I also won’t be surprised if we see a roof pull after the W candle closes on Sunday,” suggesting potential strategic moves in the market.
Rekt Capital, a popular trader and analyst, updated his views on Bitcoin’s behavior post-halving. He noted that the typical price drop following a halving event was nearing its end, marking a close to the “danger zone.”
He recalled his prediction from the end of April about a significant downturn, which materialized as Bitcoin fell to two-month lows at $56,500.
Reflecting on the market’s response, he concluded, “Bitcoin indeed downside wicked below the Re-Accumulation Range Low just like in 2016.
Thus price-wise, the Post-Halving ‘Danger Zone’ purple has been satisfied,” yet he also noted, “Time-wise however, the ‘Danger Zone’ officially ends in 2 days.”
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On May 10, the Bitcoin market experienced a significant drop, plunging over $2,000 in just an hour amidst a wave of volatility.
Before this sudden decline, Bitcoin had been relatively stable, with prices hovering around $63,494. However, the cryptocurrency soon fell to an intra-day low of $60,308, according to data from Cointelegraph Markets Pro and TradingView.
This sharp decline resulted in substantial losses for leveraged long traders who had not anticipated the drop.
Michaël van de Poppe, founder of MN Capital, commented on the situation, noting that Bitcoin had been showing “low volatility” and choppy price action since February 29.
He regarded the drop as part of a “final accumulation” phase, suggesting that if the support level was not maintained, prices could potentially fall further to between $52,000 and $55,000 as the final stage of correction.
Adding to the insights, Daan Crypto Trades mentioned that the previous day’s flash crash to $60,000 was a quick market movement meant to “punish those longs that aped in above $63K.”
This sentiment was echoed by the fact that the downturn on May 10 resulted in the liquidation of $127 million in long positions.
This contributed to a larger total wipeout of $175.17 million in a 24-hour period, as reported by Coinglass.
In just the last hour, $9 million worth of BTC leveraged positions were liquidated, which included $6.36 million from long positions alone.
This reflects the high stakes and rapid changes in the Bitcoin trading market, underlining the volatility and the dramatic impacts it can have on traders.
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The Grayscale Bitcoin Trust (GBTC), a spot Bitcoin exchange-traded fund (ETF), experienced a brief resurgence in investment inflows in early May, following a substantial period of financial hemorrhaging since its inception.
Despite this, the fund quickly reverted to outflows within just a few days, reflecting its ongoing struggles in the highly volatile cryptocurrency market.
GBTC debuted on January 11 and suffered consistent outflows for 78 consecutive days, resulting in a total loss of over $17.5 billion.
A temporary reversal occurred in early May, with inflows recorded on May 3 and May 6, totaling $63 million and $3.9 million respectively.
This influx of investment briefly suggested a potential stabilization or renewed investor interest in the fund.
However, this trend did not sustain. By May 7 and May 9, GBTC reported outflows of $28.6 million and $43.4 million respectively, effectively negating the gains made in the previous days.
This pattern of rapid reversal is indicative of the challenges faced by GBTC, marking it as the only spot Bitcoin ETF issuer to report outflows during that period while other funds under the United States Securities and Exchange Commission (SEC) saw positive or neutral investment flows.
In contrast, other Bitcoin ETFs have fared significantly better.
For instance, BlackRock’s iShares Bitcoin Trust attracted substantial investment, totaling nearly $15.5 billion.
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Other notable funds include Fidelity’s Wise Origin Bitcoin Fund, Bitwise Bitcoin ETF, and Cathie Wood’s ARK 21Shares Bitcoin ETF, which reported net inflows of $8.1 billion, $1.7 billion, and $2.2 billion respectively.
Despite these fluctuations, the average daily loss for the Grayscale Bitcoin Trust since its launch stands at a stark $211 million.
Nonetheless, the overall Bitcoin ETF market in the U.S. has maintained a positive net balance of $11.7 billion due to robust inflows into other funds.
Adding insight into the investor demographics, Jan VanEck, CEO of VanEck, commented during the Paris Blockchain Week in April that “You’ve had some Bitcoin whales and some other institutions move some assets in, but they were already exposed to BITCOIN.”
He further noted the predominant retail investor contribution, which accounts for 90% of Bitcoin ETF inflows.
Despite this, there is an anticipation for significant institutional investments from banks and traditional firms as projected around May.
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Bitcoin saw a rebound to $63,000 on May 10, amidst a notable increase in overhead liquidity, which exceeded $100 million.
Data from Cointelegraph Markets Pro and TradingView indicated a spike in BTC/USD to local highs of $63,876 on Bitstamp, followed by a period of consolidation.
This price action marked an improvement following lows below $61,000, a decline that continued despite positive unemployment data from the United States suggesting economic resilience.
Material Indicators, a trading resource, highlighted a substantial increase in ask liquidity just above the spot price.
Specifically, liquidity was reported to be over $100 million between the $63,000 and $65,000 range on the same day, according to their FireCharts tool.
Material Indicators’ co-founder, Keith Alan, provided further insights into the market’s dynamics.
He noted, “Historically, the side with the highest concentration of liquidity wins these intra-trend battles,” indicating a potential for continued upward momentum if these liquidity levels maintained.
Alan also detailed potential support levels that could come into play if Bitcoin were to decline again.
He pointed to the historical consolidation range of $58,000 to $60,000 as initial targets.
“Order book data in FireCharts shows that there isn’t currently a lot of bid liquidity at $60k, but there is more at $58k. If price holds there, it would create a higher low which is what bulls want to see,” he explained.
The significance of the 21-week simple moving average (SMA), currently at $56,127, was also underscored by Alan.
He highlighted the $52,000 level as a critical point if the SMA support failed, which could signify a 30% correction from the all-time high.
Observations indicated that much of the bid liquidity that had been forming support had moved up to $58,000, suggesting a possible shift in market sentiment.
In terms of market sentiment and its influence on Bitcoin’s price movements, Alan concluded, “Of course, nothing changes sentiment like price movement so, if bears manage to push price below $58k we will either see sentiment strengthen in the $50k – $52k range or start shifting towards the mid $40s.”
Meanwhile, Rekt Capital, a popular trader and analyst, commented on the lack of major upheaval in the market despite the previous week’s downside wick.
He stated, “Bitcoin is still simply holding the Range Low as support,” referring to the stabilization following the block subsidy halving in April, which he previously suggested hadn’t fundamentally altered market behavior.
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In the article about the cryptocurrency market, it’s noted that while Bitcoin remains separate from these predictions, the broader altcoin market might be approaching a pivotal moment.
According to experts, altcoins are expected to find their local bottom in June, potentially marking the beginning of a new bull cycle for these cryptocurrencies.
The analyst Rekt Capital shared insights on X on May 8, stating, “Altcoins are following the plan perfectly. Altcoins bottomed in early February. Altcoins sold off around the BTC Halving.
“Altcoins to bottom early summer.”
This timing coincides with historical trends in the altcoin market, which often sees shifts around these periods.
Despite a rough past month where altcoin market cap (excluding the top ten cryptocurrencies) plummeted over 21% to $265 billion, there is a broader perspective to consider.
Year-to-date, the altcoin market cap has increased by more than 24%, and over the past year, it has surged over 167%.
The correlation between altcoin sentiment and Bitcoin prices is significant, as highlighted by blockchain adviser Alex Onufriychuk from Qubic Labs Accelerator.
He told Cointelegraph, “There is a possibility that they could find their local bottom by June due to the lack of sufficient new liquidity from Bitcoin ETFs in the U.S. and Hong Kong.
This indicates that the consolidation period may be prolonged.”
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Aurelie Barthere, a principal research analyst at Nansen, pointed out that the behavior of Bitcoin is crucial for altcoins to thrive.
“Altcoins are high beta crypto, they are successful when the sentiment is very bullish. Since mid-March, the sentiment among crypto investors is less exuberant.
As BTC price consolidates around the 20-day exponential moving average, there is more volatility in alts.
We need a break above and a clear resumption of BTC uptrend for alts to outperform.”
Furthermore, Alex Onufriychuk added, “Even if altcoins find their local bottom around June, it does not necessarily mean that a bull run will start.
For a significant turnaround, more fundamental changes are required, such as increased retail and institutional investment and favorable regulatory developments, given the scarcity of new liquidity and heavy reliance on institutional reinvestment into newer projects.”
In addition, the broader economic environment might influence altcoin markets.
For instance, the M2 money supply turned positive year-over-year for the first time since November 2023, suggesting that investors may begin seeking hedges against inflation or alternative investments, potentially benefiting altcoins and memecoins and marking the onset of “altszn.”
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FTX’s recent amended proposal, which includes an exculpatory clause, has met with significant backlash from its creditors.
Released on May 7, the proposal is aimed at compensating the creditors, including a noteworthy figure of “billions in compensation.” However, the inclusion of an exculpatory clause has become a major point of contention.
This specific clause would absolve Sullivan & Cromwell (S&C), the law firm managing FTX’s bankruptcy, from any liability for damages incurred during the bankruptcy process.
S&C’s involvement in the company’s affairs, as it had previously served as outside counsel in various transactions, further complicates perceptions.
Sunil, a prominent FTX creditor and member of the FTX Customer Ad-Hoc Committee, which represents over 1,500 creditors, strongly criticized the clause.
He highlighted that the clause would prevent S&C from being held accountable for potential misdeeds including “selling FTX assets at 70% to 90% discounts to their own clients and insiders.”
On May 8, Sunil expressed his discontent on X, stating:
“S&C included an exculpation clause so they can not be held liable for misconduct — selling FTX assets at 70% to 90% discounts to their own clients and insiders (Ledger X, Galaxy), not restarting FTX 2.0, etc if we accept the plan.”
This controversy follows a lawsuit filed three months prior by top FTX creditors against S&C.
The lawsuit accused the firm of actively participating in FTX’s “multibillion-dollar fraud” and profiting from these misdeeds. A February 16 court document illuminated the allegations:
“S&C knew of FTX US and FTX Trading Ltd.’s omissions, untruthful and fraudulent conduct, and misappropriation of Class Members’ funds.
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“Despite this knowledge, S&C stood to gain financially from the FTX Group’s misconduct and so agreed, at least impliedly, to assist that unlawful conduct for its own gain.”
The financial ties are further underlined by the fact that FTX owed S&C up to $1.45 billion in legal bankruptcy fees, a figure confirmed by compensation filings from December 2023.
The response from FTX’s creditors has been overwhelmingly negative, especially concerning the proposal’s payment plan.
While FTX debtors have suggested a compensation formula based on a depreciated Bitcoin valuation of $16,800, critics argue this is grossly unfair given Bitcoin’s price increase since FTX’s collapse.
BitGo CEO Mike Belshe commented on the matter in a May 8 X post:
“0% of FTX creditors agree that receiving $16800 for your bitcoin is fully compensated. I understand why the bankruptcy process needs to work this way but let’s not pretend victims are getting their money back or that FTX wasn’t as awful as it was.”
Given these circumstances, there’s a significant possibility that the amended plan will be rejected by the creditors, as further indicated by Rob, Paradex’s head of growth and a pseudonymous FTX creditor, who voiced his decision to reject the plan on May 8:
“Icing on the cake from the team that destroyed billions of potential value for FTX customers. This can’t be allowed. I’m voting NO on this plan.”
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Australia’s tax authorities are stepping up their efforts to address tax compliance among cryptocurrency users, reflecting a global trend towards stricter regulation of digital assets.
The Australian Taxation Office (ATO) is seeking detailed personal and transaction data from up to 1.2 million users of cryptocurrency exchanges.
This initiative is part of a broader attempt to identify those who may have skirted tax obligations on their crypto trades, as detailed in a notice issued last month, which was obtained by Reuters.
The ATO’s data request includes not only basic identity information like users’ birth dates, but also extends to their social media accounts, phone numbers, and financial particulars such as wallet addresses, the types of coins traded, and associated bank account details.
The notice explains that cryptocurrencies, unlike traditional foreign currencies, are considered taxable assets in Australia.
This classification means that profits from cryptocurrency sales are subject to capital gains tax.
This move by the ATO coincides with significant profits in the cryptocurrency markets, highlighted by substantial increases in the values of major cryptocurrencies.
Bitcoin, for instance, has seen a 44% increase since the start of the year, while Ether’s value has risen by 32%.
Additionally, the market capitalization of other significant altcoins (excluding Bitcoin and Ether) has climbed over 27%, according to TradingView.
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The ATO notice points to the potential for using cryptocurrencies for tax evasion due to the possibility of purchasing crypto assets under false identities.
This concern is not isolated to Australia, as similar regulatory actions are taking place globally.
For example, the Canada Revenue Agency’s compliance branch director general, Sahil Behal, disclosed that the agency is conducting over 400 crypto-related audits and investigating numerous crypto investors to recover unpaid taxes.
This action builds on the discovery of an estimated $39.5 million in unpaid taxes from the 2023-2024 fiscal year.
In Turkey, upcoming legislation expected later this year aims to establish a legal framework for taxing cryptocurrencies, recognizing the country’s position as a significant player in the crypto economy.
Meanwhile, in the United States, there are proposals to increase the long-term capital gains tax rate to 44.6% for high earners, alongside a potential 25% tax on unrealized gains for extremely wealthy individuals.
According to Matthew Walrath, founder of Crypto Tax Made Easy, despite these stringent proposals, they are unlikely to affect the vast majority of people, describing them as “a big, fat nothing burger” since they are still merely proposals.
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Bitcoin exchange inflows have plummeted to levels last seen nearly a decade ago, according to recent data from the on-chain analytics platform CryptoQuant.
Daily BTC inflows have been decreasing significantly since the cryptocurrency’s peak price of $73,800.
As of April and May 2024, major cryptocurrency exchanges are recording some of the lowest daily inflows in ten years.
On April 20, only 8,400 BTC entered exchanges, a number reminiscent of times when Bitcoin was priced under $1,000 per coin.
CryptoQuant monitors a substantial number of spot and derivative exchanges to gather these insights.
This trend signifies a major shift in investor behavior, indicating a newfound reluctance to position Bitcoin for quick sales on exchanges.
Institutional interest in Bitcoin has been growing, suggesting the dawn of a new era in cryptocurrency investment.
Despite the price’s recent volatility, including a drop to $56,500 last week, the desire to increase Bitcoin holdings remains strong, according to reports from Cointelegraph.
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Market analysts continue to keep a close eye on Bitcoin whales—investors who hold large amounts of BTC.
CryptoQuant contributor Mignolet noted that whales, particularly those holding between 1,000 to 10,000 BTC, have been largely inactive in terms of selling during the current market uptrend.
“Whales may not be willing to sell yet as the cycle has not ended,” Mignolet explained, highlighting a potential increase in over-the-counter (OTC) market activities that could absorb significant sell volumes without requiring deposits into exchanges.
Checkmate, a pseudonymous lead on-chain analyst at Glassnode, expressed skepticism about the practice of “whale watching.”
He suggested that many of the large wallets being tracked might be linked to entities like ETFs rather than individual high-stake investors.
“There will be some actual whales yes…but as both buyers and sellers. Not once have I seen true alpha extracted from whale watching,” he stated on social media platform X.
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Arthur Hayes, co-founder of BitMEX, believes the next few months present a prime time for cryptocurrency investment, particularly for those with disposable fiat money.
In an interview with Cointelegraph, Hayes emphasized, “Those people who have fiat and extra cash that want to allocate to crypto, this is the perfect opportunity to do so.”
He sees the current stagnant market conditions as a golden chance to buy before the expected uptrend in the crypto market.
He attributes the anticipated rise in Bitcoin and other cryptocurrencies later this year to inflationary monetary policies.
Hayes suggests that these policies will play a central role in driving the market upwards.
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He states, “Major economies around the world are going to print even more money between now and, say, the next 18 to 24 months,” signaling potential inflationary pressures that could increase the value of decentralized digital currencies like Bitcoin.
Furthermore, Hayes argues that the forthcoming United States presidential elections will act as a bullish catalyst for the cryptocurrency market.
He believes that financial authorities in the U.S. will likely adopt looser monetary policies to aid President Joe Biden’s reelection campaign.
Such actions, according to Hayes, will mirror past trends where monetary expansion was linked to rallies in the crypto market.
He explains the process by which governments can influence the economy and, by extension, the crypto market: “When you control the purse of the government, it’s very easy to do so by printing money, borrowing it, and handing it out to people in various forms.”
This method of monetary manipulation historically correlates with increases in the cryptocurrency market, suggesting a similar outcome could occur in the upcoming election cycle.
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Bitcoin (BTC) saw a resurgence above the $64,000 mark on May 7 as it experienced significant liquidity on both sides of the order book.
This upward movement was identified from data provided by Cointelegraph Markets Pro and TradingView, which showed BTC escalating from a low of $62,864 at Bitstamp earlier in the day.
The currency remained within a trading range that had been established since May 3. Despite this, the price fluctuations were rapid, creating a volatile environment that led to the liquidation of positions in both directions.
The late trading hours saw a focus on bid liquidity near $63,500 before Bitcoin reversed direction, targeting a more substantial liquidity pool roughly $1,000 higher, as per the data from CoinGlass.
Daan Crypto Trades, a recognized trader, commented on the behavior seen over the weekend, specifically the closure of the CME futures gap.
“Took some hours after the futures re-open but got there on Monday which is something we tend to see quite often,” he mentioned, discussing the patterns observed.
Another trader, Skew, pointed out several crucial levels that should be monitored going forward.
He noted, “Price currently still chopping around $64K,” in his latest market analysis, adding the importance of trading the monthly open and $61K as significant demand markers in the market, with a high timeframe pivot at $67K.
The recovery from recent two-month lows around $58,000 also marked a notable divergence from the 2021 bull market trend, when Bitcoin first reached similar levels.
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This difference was attributed to strong spot buyer demand, as emphasized by Skew.
Regarding the ETF market, the narrative around U.S. and Hong Kong Bitcoin exchange-traded funds (ETFs) turned bullish.
On May 6, the day before the price surge, U.S. spot Bitcoin ETFs, including the Grayscale Bitcoin Trust (GBTC), witnessed substantial inflows.
Data from Farside, a UK-based investment firm, revealed positive inflows totaling $217 million across all 10 spot ETFs.
This influx marked GBTC’s first day of positive inflows since its conversion to an ETF.
The stability of inflows into the newly launched Hong Kong spot ETFs was also highlighted, with “very stable volume-wise with consistent $8-9 million,” as noted by popular commentator WhalePanda.
He further added, “As long as inflows stays positive here the supply is getting scooped up so overall quite bullish.”
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