Bitcoin Decline Sparks Trader Concerns as USDT Faces Selling Pressure on Curve and Uniswap

Crypto Global Bid and Ask Metric Plunges 20% Over Weekend, Indicating Extremely Low Liquidity Levels

Robinhood's Crypto Trading Volume Plummets by 68% in May, Reaching $2.1 Billion

Bitcoin (BTC) started the U.S. trading week on a downward trend, dropping below $27,500 during the afternoon (Eastern Time).

According to CoinCryptoUs data, the biggest cryptocurrency in terms of market capitalization was trading at approximately $27,350, indicating a decline of more than 5.5% within the past 24 hours. This drop in value occurred as investors continued to assess the sudden increase in demand for the PEPE meme coin and the Binance congestion problems that led to the temporary suspension of bitcoin withdrawals over the weekend.

Binance has restored its service on Sunday night (ET), however, the disruptions and the surge in Bitcoin's price have sparked concerns regarding the potential consequences of high-volume Bitcoin transactions.

Ether (ETH) exhibited a similar pattern by slipping below the $1,900 level that it had sustained for much of the previous seven days. As the second-largest cryptocurrency in terms of market value, it was trading at approximately $1,829, down by 4.4% within a 24-hour period.

The Ethereum Shapella upgrade has bolstered the deflationary narrative surrounding ETH. This sentiment is supported by the fact that ETH's net issuance or annualized inflation rate, as reported by ultrasound.money, has dropped to -2.7%. Additionally, ultrasound.money's data tracker indicates that over the last seven days, more than 62,300 ETH, valued at around $116 million, have been burned.

“Both BTC and ETH haven't tested near-term supports since the rally we saw around mid-March," Joe DiPasquale, CEO of crypto fund manager BitBull Capital, told CoinDesk in an email.

DiPasquale suggests that there is a possibility for BTC to test a support level between $25,000 and $27,000 before rebounding. However, he remains optimistic about the economic outlook for both BTC and the wider cryptocurrency market, which he believes will continue to flourish. In light of this, DiPasquale advocates for accumulating BTC and ETH during dips in the market, which he sees as a sound investment strategy.

On Monday, many of the major cryptocurrencies experienced a decline in value, with XRP and MATIC, which focus on crypto payments and Polygon, respectively, dropping more than 8% in value. XRP was trading at around 42 cents, while MATIC was at around 92 cents. The popularity of the PEPE craze also appeared to be dwindling, with its market capitalization dropping from over $1 billion to around $878 million, as reported by Messari data.

The CoinDesk Market Index (CMI), which provides an overview of the performance of the entire cryptocurrency market, recorded a decline of over 5% for the day.

In a Friday newsletter, Greg Cipolaro, the Global Head of Research at NYDIG, a bitcoin investment firm, noted that despite its short-term price fluctuations, BTC is increasingly being viewed as a "buy-and-hold asset" based on on-chain data.

“With more bitcoins being held for longer, a dwindling supply is available for short-term trading,” Cipolaro wrote, adding that this may 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 purchase. This may result in upward pressure on prices if the demand for bitcoin grows,” he wrote.

During Monday's midday trading session, equity markets were mixed, with the S&P 500 and tech-focused Nasdaq Composite experiencing almost no change, while the Dow Jones Industrial Average (DJIA) recorded a 0.1% decline.

In the bond markets, the 2-year Treasury yield note - which reflects short-term interest rate expectations - saw a slight increase of 8 basis points, bringing it to around 3.99%. The 10-year Treasury yield note also rose by 7 basis points, reaching 3.51%.

Source Coindesk