As the market nears the start of summer, Bitcoin may see a slump in June. The flagship cryptocurrency rose 13% in May, its eighth monthly gain in the past nine months and its best month since February, when it surged 44%, according to Coin Metrics. This was due to an Ethereum-led rally last week, which came before the SEC approved rule changes to allow Ethereum ETFs in the U.S., sending the cryptocurrency soaring 20% in two days. Currently, companies looking to sponsor an Ethereum ETF must file an S-1 registration form for each individual fund. Until then, Bitcoin ETFs and the halving are history, with no clear catalyst for crypto. “If these new products are fully approved by the SEC, possibly as soon as late June, we can expect it to act as a catalyst for Ethereum and the broader altcoin space, with Bitcoin riding on it,” said Antoni Trenchev, co-founder of cryptocurrency exchange Nexo. BTC.CM=3 million mountains Bitcoin has been trading in a narrow range since retreating from its record in March. “Bitcoin has barely moved in the past three months, and a continuation of the same is not necessarily a bad thing. A long and boring period of consolidation is usually preceded by a violent movement. If you look at the last halving year in 2020, Bitcoin did nothing for five months, then it surged,” Trenchev added. Bitcoin has risen by $5,400, or 8.7%, in the past three months. June looks volatile for Bitcoin. The cryptocurrency’s average monthly return over the past decade is just 0.25%, according to CoinGlass. Trenchev noted that the returns are skewed by two particularly bad years in 2022 and 2013. Over the next month, traders will be keeping a close eye on the Federal Reserve’s next policy meeting on June 11 and 12. Notably, the central bank’s preferred inflation gauge, the Personal Consumption Expenditures Price Index, released on Friday, rose 0.2% in April as expected. As a result, “Bitcoin may continue to fluctuate within the descending channel,” said Yuya Hasegawa, crypto market analyst at Japanese bitcoin exchange Bitbank. He added, “Bitcoin could quickly lose about half of its gains from the past two weeks and fall to around $65,000.” Beyond the Fed’s policies, investors are closely listening to messages from the U.S. presidential election, with the SEC’s adoption of an Ethereum ETF highlighting the political volatility of crypto assets, and “Washington will remain the center of the crypto universe in June,” Trenchev said. “Last month we witnessed the unlikely, unlikely spectacle of both sides of the U.S. political divide becoming enthusiastic about cryptocurrencies ahead of the U.S. election,” Trenchev said. “It will be very interesting to watch that story unfold in June, and it will have a major impact on the long-term regulation of the sector.” Bitcoin Miners Struggle After Halving Meanwhile, Bitcoin prices could come under some pressure from miner selloffs. Hasegawa said the average time it takes miners to find and process a new block is increasing, while the network’s hashrate — the total amount of computing power miners need to mine bitcoins and process network transactions — is declining. This suggests miners’ profitability is weakening as the ability to mine new coins wanes. “This indicates that bitcoin mining is becoming less profitable and miners are struggling to mine,” Hasegawa said. “If the price continues to fall, miners may have to sell their bitcoin holdings.” [maintain] Market watchers had expected the phenomenon to occur after Bitcoin’s halving in April, which drastically reduced block rewards, the main source of income for bitcoin miners. Julio Moreno, head of research at CryptoQuant, believes miners’ current struggles are due to lower transaction fees after the halving. That said, he said there has been no mass sell-off from miners yet.
Bitcoin Investors See Sideways Trading in June as Attention Turns to Washington
Services
© 2024 Business Investopedia. All Rights Reserved.