Bitcoin (BTC) started the U.S. trading week on a downward trend, dropping below $27,500 in the afternoon (ET). According to CoinDesk data, the largest cryptocurrency by market capitalization was recently trading at approximately $27,350, representing a decline of over 5.5% in the past 24 hours. The decline in BTC’s value was attributed to investors’ concerns regarding the surge in interest in the PEPE meme coin and Binance congestion issues. These issues had led the exchange giant to temporarily suspend bitcoin withdrawals over the weekend. Binance resumed its service on Sunday night (ET), but the disruptions and the rising price of bitcoin raised questions about the impact of high transaction volumes.
Ether (ETH) followed a similar pattern, falling below the $1,900 level that it had held for the majority of the past seven days. The second largest cryptocurrency in terms of market value was trading at around $1,829, indicating a 4.4% decline over the past 24 hours. The deflationary narrative surrounding ETH, following the Ethereum Shapella upgrade, gained strength as the net issuance or annualized inflation rate of ETH recently dropped to -2.7%, as reported by ultrasound.money. In the past seven days, more than 62,300 ETH, equivalent to around $116 million, were burned according to ultrasound.money’s data tracker.
Joe DiPasquale, CEO of crypto fund manager BitBull Capital, noted that both BTC and ETH have not tested near-term supports since the rally witnessed around mid-March. He suggested that BTC might test support levels between $25,000 and $27,000 before rebounding. DiPasquale expressed optimism about the economic outlook for BTC and the broader crypto market, stating that accumulating BTC and ETH during price dips would be a sound strategy.
On Monday, most major tokens experienced declines, including XRP and Polygon’s MATIC, which both dropped over 8% to trade at around 42 cents and 92 cents, respectively. The PEPE craze, as indicated by its market cap, appeared to be subsiding, with its value dropping to approximately $878 million after reaching over $1 billion prior to the weekend, according to Messari data.
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, stated in a newsletter that despite short-term price fluctuations, BTC is increasingly being viewed as a “buy-and-hold asset” based on on-chain data. Cipolaro noted that with more bitcoins being held for longer periods, the available supply for short-term trading is diminishing. This could result in increased volatility or trading costs due to wider spreads. Additionally, the fixed supply nature of bitcoin implies that fewer bitcoins are available for purchase by others, potentially leading to upward price pressure if the demand for bitcoin continues to grow.
In the equity markets, midday trading on Monday saw mixed performance, with the S&P 500 and tech-heavy Nasdaq Composite trading almost flat, while the Dow Jones Industrial Average (DJIA) was down 0.1%.