The external background remains negative, and institutional investors continue to withdraw money from cryptocurrencies. This puts pressure on Bitcoin, which is about to update the anti-record: a decline for eight weeks in a row.
The outflow of funds from cryptocurrency investment funds last week reached the highest level since July 2021 – $141 million. The total amount in fund management decreased to $38 billion.
Investors are withdrawing funds from high-risk assets due to the tightening of the Fed’s monetary policy. The trend is observed in a wide range of financial instruments, including the stock market, which is why the US dollar index has reached seven-year highs.
Cryptocurrency exchanges are experiencing an outflow of Bitcoin, and the number of transactions is decreasing. The total volume held by crypto exchanges decreased to 2.5 million BTC. The largest stock is demonstrated by Coinbase (NASDAQ:COIN) with a share of 34%.
The low activity of the network is manifested in the drop in commission fees:
after the recent surge due to the collapse of Terra (LUNA) and the appeal to Bitcoin as a savings asset, the total fees have again decreased to the level of 10-12 BTC per day.
The main metrics indicate the caution of participants: trading activity is declining, Bitcoin is flowing to cold wallets, and in options trading, the put/call ratio has increased from 50% to 75% due to the desire to hedge the risk of further decline.
Under the influence of the weakness of the cryptocurrency market, negative statements about Bitcoin are increasing. So, on May 22, the head of the ECB, Christine Lagarde, said that the cryptocurrency does not have security that could serve stability. And on May 23, the head of the Bank of England, Andrew Bailey, said that Bitcoin has no intrinsic value and is not suitable as a means of payment.
It is not surprising that under such influence, forecasts of a strong decline in Bitcoin are increasingly being heard. For example, Scott Meinerd of Guggenheim Partners predicts a decline to $8 thousand, comparing the cryptocurrency with the dot-com bubble in the early 2000s.