Bitcoin BTC Price Drops Below $27.5K As Investors Weigh Meme Craze, Binance Overload Issues
Bitcoin (BTC) started the US trading week, falling below $27,500 in the afternoon (ET).
The largest cryptocurrency by market capitalization recently traded at around $27,350, down more than 5.5% in the past 24 hours, according to CoinDesk data, as investors continued to ponder a surge in interest in the PEPE meme coin and Binance- problems that forced the exchange giant to temporarily suspend bitcoin withdrawals over the weekend.
Binance resumed service on Sunday evening (ET), but the outages and the rising price of bitcoin raised questions about the impact of large bitcoin transaction volumes.
Ether (ETH) followed a similar pattern, falling below the $1,900 level it has held for much of the past seven days. The second-largest crypto by market cap was trading at around $1,829, off 4.4% on a 24-hour basis.
ETH’s deflation narrative following the Ethereum Shapella upgrade has strengthened as ETH’s net emission, or annual inflation rate, recently fell to -2.7%, according to ultrasound.money. More than 62,300 ETH, worth around $116 million, have been burned in the past seven days, ultrasound.money’s data tracker showed.
“Both BTC and ETH have not tested near-term support since the rally we saw around mid-March,” Joe DiPasquale, CEO of crypto fund manager BitBull Capital, told CoinDesk in an email.
DiPasquale said BTC could test support between $25,000 and $27,000 before bouncing again, although the economic outlook is favorable for BTC and the broader crypto market to thrive. He called accumulating BTC and ETH on dips a “sound strategy.”
Most major tokens also traded in the red on Monday, including crypto-payments-focused XRP and Polygon’s MATIC, which both surged over 8% to trade at around 42 cents and 92 cents, respectively. PEPE mania appeared to be waning with its market capitalization falling to around $878 million after peaking above $1 billion before the weekend, Messari data showed.
The CoinDesk Market Index (CMI), which measures the overall performance of the crypto market, was down over 5% for the day.
Greg Cipolaro, global head of research at bitcoin investment firm NYDIG, wrote in a Friday newsletter that despite short-term price fluctuations, BTC is increasingly acting as a “buy-and-hold asset” based on on-chain data.
“With more bitcoins held longer, a diminishing supply is available for short-term trading,” Cipolaro wrote, adding that this could result in increased volatility or trading costs through wider spreads.
“Given bitcoin’s fixed supply nature, this also means that fewer bitcoins are available for others to buy. This could result in upward pressure on prices if demand for bitcoin grows,” he wrote.
Stock markets were mixed Monday afternoon, with the S&P 500 and tech-heavy Nasdaq Composite trading nearly flat, while the Dow Jones Industrial Average (DJIA) was down 0.1%.
In bond markets, the note on the 2-year government yield – an indicator of short-term interest rate expectations – was 8 basis points higher at around 3.99%. The note on the 10-year government yield also rose 7 basis points to 3.51%.
