Bitcoin BTC price hangs below $27K as investors search for a catalyst

Good morning. Here’s what happens:

Prices: Bitcoin dropped below $27K for the second day in a row. Investors are in a wait-and-see mode.

Insight: Bitcoin takes a breather even amid mildly positive jobs and price data this month.

Bitcoin drops below $27K again

For the second day in a row, bitcoin fell to late March levels below $27,000, but remained safely within its weeks-long range as investors shrugged off positive employment and price data and the latest banking crisis to continue waiting for a true price catalyst.

The largest cryptocurrency by market cap recently traded at around $27,052, down 1.8% in the last 24 hours. BTC has changed hands between $25,000 and $30,000 throughout the spring. A number of analysts believe it will stay there, without a compelling reason to push higher – or lower.

“The price reaction to macro data has not been as significant in recent weeks,” Katie Talati, head of research at blockchain asset management firm Arca, told CoinDesk TV. “I think broadly, just like stocks, everybody feels like a lot of the macro moves are baked in. A lot of what we’ve seen over the last 24 hours, though, is a lot more related to things specific to the digital asset room.

Ether was recently trading at around $1,800, down around 1.9% from the same time on Wednesday. The second-largest crypto by market capitalization has also remained largely flat in recent weeks, despite early April’s successful Ethereum Shanghai upgrade, which completed the blockchain’s transition from a proof-of-work to more energy-efficient proof-of-stake protocol.

The Pepecoin-inspired meme craze fizzled out less than a week after reaching an astounding $1.8 billion market cap. Data from crypto-intelligence firm Nansen showed that by late Thursday morning (ET), “smart money” wallets — crypto accounts of individual traders or institutions known for their profitable moves — had reduced PEPE holdings by $3 million over the past 24 hours.

Talati said the team behind PEPE “did a really good job promoting the token, and really built a lot of hype around it.”

But she added: “These tokens tend to pop up and get a lot of notoriety when there’s not a lot going on in this space. They’re usually the most accessible. A lot of newer players in crypto like to trade them.”

Other major cryptos were mostly in the red. The CoinDesk Market Index, a measure of crypto market performance, fell 2.4%.

Stocks were mixed with the Dow Jones Industrial Average (DJIA) and S&P 500 falling slightly, but the tech-heavy Nasdaq rising a fraction of a percentage point. The banking sector fell after Los Angeles-based PacWest Bancorp reported it had lost more than 9% of its deposits last week. But PacWest’s recent troubles seemed like an afterthought for crypto investors.

Meanwhile, Arcas Talati was optimistic about DeFi. “There’s definitely a lot going on in DeFi,” she said. “I’ve been highlighting in recent weeks, a lot of development on certain projects like Curve and Aave, both of which launched or are (launching) their own stable coin.”

Bitcoin takes a little ‘breather’ in May as investors mull a mini-wave of positive jobs and price data, said Alex McDougall, CEO of Stablecorp, in a CoinDesk TV interview on Thursday.

Bitcoin’s price has plunged from highs near $31,000 less than two weeks ago, falling to below $27,000 on Wednesday after markets were spooked by an unsubstantiated rumor that the US government was selling about $320 million in bitcoin. The largest crypto by market capitalization has been knocked out in recent weeks, in short, a compelling reason to move from a week-long range.

“We’ve seen interest rates fluctuate a little bit,” said McDougall, whose firm provides blockchain-powered financial products. “And the decoupling from risk on the narrative of tech stocks is interesting. In any era where there are so many competing narratives at once, you can almost see the market switching between the narratives. Is this a doomsday hedge? Is this the risk on your asset? Is the banking sector dying?”

He added “This seems like an opportunity to take a deep breath – a lot of people taking profits that have been underwater for a little while, an opportunity for accumulation.”

McDougall noted that the meme-pool-fueled congestion on the bitcoin network, which prompted exchange giant Binance to suspend withdrawals twice over the weekend, had raised concerns about the blockchain’s ability to handle additional volume generated by NFT-like Ordinals. There are “known challenges, and scalability is always part of that trilemma,” he said. “When they start to rise, it’s easy to say ‘we’re a little too overhyped there. Let’s cool down a little bit.'”

He said liquidity is another issue the crypto industry needs to address. “It wasn’t a healthy marketplace, but at least we had this kind of global liquidity connection before,” he said. “And you’re starting to see the breach and global assets not being able to move as smoothly across borders, and those liquidity plugs are starting to disconnect a little bit.”

But he was happy about bitcoin’s future. “A lot of these things are kind of the natural growing pains,” he said, adding: “How could you not be bullish? It’s so easy to go to this technology long-term, but the path there is not going to be right.”

Bitcoin (BTC) fell below $27,500 following the release of April PPI data. Arca Research Manager Katie Talati shared her crypto market analysis. In addition, Timothy Massad, Kennedy School of Government at Harvard University Research Fellow and former CFTC chairman, discussed the future of US crypto regulation after a joint House hearing examining the future of digital assets on Wednesday. And early Dogecoin backer Gary Lachance discussed the rise of the meme economy.

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