Key Points
- Bitcoin (BTC) fell to multi-month lows on May 1, resulting in traders losing half a billion dollars.
- US treasury secretary Janet Yellen’s fiscal policy moves and a legal judgment against crypto exchange Binance worsened market sentiment.
The value of Bitcoin (BTC) plummeted to new lows for several months on May 1, leading to significant losses for traders.
Bitcoin’s Price Drop
During the Asian trading session, the losses for BTC continued to grow, with the BTC/USD pair falling to $57,082 on Bitstamp. This drop marked the lowest level since February and increased Q2 losses to over 20%.
The market sentiment was negatively affected by the aggressive fiscal policy actions of US treasury secretary Janet Yellen and a legal judgment against crypto exchange Binance and its founder Changpeng Zhao.
Market Reactions
Yellen’s decision to withdraw liquidity from the market, rather than using reserves to increase it, was a blow to risk assets across the board. This decision led to a decrease in risk appetite, according to financial commentator Tedtalksmacro.
Before the market downturn accelerated, there were already warnings for Bitcoin and altcoins. The market had been stagnant since BTC/USD reached all-time highs in mid-March. Now, key support levels are disappearing, offering no comfort to the bulls.
Charles Edwards, founder of Capriole Investments, outlined two potential paths for Bitcoin’s price trajectory. He stated that as long as we trade below $61.5K, a sell-off is more likely. A strong reclaim of $61.5K would give some hope to the bulls.
Bitcoin Liquidations
According to CoinGlass, a monitoring resource, 24-hour crypto liquidations amounted to $470 million at the time of writing. Bitcoin accounted for $160 million of the total, with Ethereum (ETH) at $120 million.
Despite BTC/USD dipping below $60,000 before the April monthly close, April 2024 was still the pair’s worst month since the depths of the 2022 bear market.
