The cryptocurrency market was sharply corrected on May 12 after the hype around the dog model weakened when Ethereum co-founder Vitalik Buterin dumped a slew of Hot Shiba Inu (SHIB), Dogelon Mars (ELON) and Akita Inu (AKITA) into the market and Proceeds donated to charity.
Data from Cointelegraph Markets and TradingView shows that when the meme tokens were sold off, the price of Bitcoin (BTC) continued its recent weakness, dropping nearly 8% to $ 53,500 before recovering to $ 54,700.
4 hour chart BTC / USDT. Source: TradingView
ETH was less affected by the sale and had already managed to recover more than $ 4,000 to offset its daily losses as netizens praised Buterin’s decision to donate his mother’s coins to various charities. Traders also hope the decrease in trading activity in meme tokens will help lower gas fees on the Ethereum network.
Merchants are not sure what is happening to Bitcoin and Ether
Due to the decrease in meme token trading activity, traders may turn their attention to Bitcoin again, but there is some uncertainty as to what might happen next.
According to Chad Steinglas, head of trading at cryptocurrency firm CrossTower, “BTC is actually doing quite well as a value-added store,” especially when compared to the broader financial market developments, including the severe pressures faced by the rallying stocks. … May 12, which was interpreted as a trigger for Fed tightening earlier. ”
Steinglass highlighted the fact that Bitcoin’s struggle to exit the trading territory it has been in for 3 months may be a symptom of the new role as a store of value, and suggested that traders who have BTC in their portfolios may “sell” BTC. “Especially GBTC to increase cash flow because it reduces cash. Of its general impact. ”
“Despite these headwinds, BTC largely survived. It took a few quick steps, but it has garnered strong support for some really big sales. It might already be turning into a more stable asset, at least for now.”
Regarding Ether, Steinglass noted that “ETH is in a new pricing system” due to “upcoming protocol changes that will remove inflation and also create incentives for retaining tokens to validate efforts”, making it difficult to determine which will be a “new good fair value for ETH” .
On broadcasting, Stinglas said:
“We can easily have more space to work, but if there is some delay in updates, it helps in tracking events quickly.”
4 hour ETH / USDT chart. Source: TradingView
David Lifshitz, CEO and Chief Investment Officer of ExoAlpha, provided insight into the potential of Ether, who pointed to the “explosive growth” of Ether in 2021, when the price rose by more than 455% year-to-date and 100%. In the past three weeks alone, it may have amounted to a “news device buying and selling rumor” ahead of the upcoming EIP 1559 update in July.
“If you’ve been gathering for a few weeks, it might not hurt to get some profit off the table. What hurts in the end doesn’t get past the last step, but it remains intertwined when the music stops.”
As far as Bitcoin is concerned, Lifshitz has expressed concern about the regional trade that Bitcoin has been stuck in recently.
Lifshitz said Bitcoin is currently offering:
“There is no catalyst to grow (or decline), and the risk of remaining fully open is much greater than the potential profit.”
Financial markets are dropping due to inflation concerns
Equity markets have also seen heavy selling due to concerns over rising inflation, which is seen as gradually increasing in many sectors of the economy.
The latest CPI data shows that prices rose at the fastest pace since April 2007, and some economists have warned that the calculations are showing no signs of slowing down for the foreseeable future.
As a result of this pressure, the S&P 500, Dow and NASDAQ indices fell significantly on Wednesday, closing the trading day at 2.14%, 1.99% and 2.67% respectively.
Despite the market downturn, altcoins such as AAVE gained 30%, while Polygon (MATIC) and Kusama (KSM) gained 18%.