Bitcoin sees best day in a week after worst month in nine years
06:46, 1 June 2021
Bitcoin (BTC) went up to $37,300 on Tuesday morning (6 AM UTC) scoring a 24-hour gain of 8%, its best daily performance in the last week. However, this move comes after the worst month for the dominant cryptocurrency since September 2011. Bitcoin lost 37.5% of its value in May, second only to a 40% drop in September 2011, according to Coindesk.com.
All the leading digital currencies were recording significant daily gains on Tuesday morning. Ethereum (ETH) was up 15.4%, cardano (ADA) had an advance of 11.3%, binance coin (BNB) was up 14.6%, and ripple (XRP) was trading 17% higher than the previous morning, according to Coinmarketcap.com data.
However, a lack of clarity over where the crypto market will go next is leading traders to adopt a cautious approach. Bitcoin is now about 42% under the all-time high level it reached in mid-April and the technical signals are not very encouraging.
Sell in May and go away?
For decades, the idea that investors should sell their stocks in May and return in the autumn was an important part of stock market folklore. The idea behind this was that traditionally stock markets had weak performances in May-October. This year, the same may apply to cryptocurrencies. After a heated start to the year, which took most crypto assets to all-time highs, May brought a chill, especially for the new investors lured to the crypto market by the whopping gains in the last year.
The Bitcoin market has become a battleground between bulls and bears, as market intelligence firm Glassnode puts it in its latest analysis. The short-term holders, who have entered the market this year, have been the most active sellers in recent weeks while the long-term coin holders, whose positions are still on a profit, have been accumulating.
However, one market indicator is currently on a “historical knife-edge” as the net unrealised profits of long-term bitcoin holders have been going down, according to Glassnode. If these unrealised profits go down to under 0.75 of the bitcoin’s capitalisation, this could persuade more long-term holders to sell and mark their profits before they completely evaporate, which would push bitcoin into a long-term bear market, similar to 2014 and 2018.