Bitcoin and crypto prices have struggled over the past month, with about $ 1 trillion wiped out of the value of the combined cryptocurrency market since it peaked at around $ 2.5 trillion in mid-May.
The bitcoin price fell to just over $ 30,000 per bitcoin this week and then rebounded thanks to plans by El Salvador to accept bitcoin as its official currency alongside the US dollar. Elsewhere, five other major cryptocurrencies by value – Ethereum, BNB Binance, cardano, and dogecoin – have also lost ground, each dropping 5-10% this week.
Now, even though the price of bitcoin has returned to the $ 40,000 mark over the past couple of days, analysts at Wall Street giant JPMorgan
“We believe the return to backwardation in recent weeks has been a negative signal indicating a bear market,” JPMorgan strategists led by Nikolaos Panigirtzoglu wrote in a post that first appeared on financial news. BloombergThe bitcoin price warning from over $ 50,000 per bitcoin in May is “an unusual occurrence and a reflection of how weak the demand for bitcoin is currently from institutional investors.”
Analysts have pointed to weakness in the bitcoin futures market, which they say echoes the 2018 bear market, which was named crypto winter due to its devastating impact on cryptocurrencies across the board.
The boom in bitcoin and cryptocurrency prices in recent months, seen in Ethereum, Cardano, BNB Binance and even bitcoin rival dogecoin, has surged many thousands of percent, fueled by a combination of long-awaited institutional rollout and retail investor fears. absence (FOMO).
As traders and investors accumulated these so-called “altcoins”, the dominance of bitcoin in the cryptocurrency market – a measure of how much the overall cryptocurrency market is weighted against bitcoin – fell to just over 40%, down from around 70% at the start of the period. … year.
Bitcoin dominance may need to return to more than 50% before the bull market returns, according to JPMorgan analysis. Bitcoin dominance fell below 50% at the end of April, for the first time since July 2018, according to CoinMarketCap data.
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The sell-off that shook the broader cryptocurrency market and caused Ethereum to lose half of its value in just two weeks was exacerbated by concerns about the crackdown on Bitcoin and cryptocurrencies in China.
However, some cryptocurrency market watchers believe that the price of bitcoin may be “nearing bottom.”
“Looking deeper into the bitcoin market adjustments, the -49% drop in May was the sixth largest event of its kind and can be seen as one of the largest monthly adjustments in history,” said Lucas Enzersdorfer-Konrad, chief operating officer of Austrian cryptocurrency exchange Bitpanda. wrote in an email.
“With that said, adjustments of this magnitude are common and to be expected. Bitcoin ended the month with a 35% drop and is still struggling to find a new support zone. The price fell by almost 50% from its all-time high. some upbeat news suggests bitcoin is nearing bottom. “