Bitcoin price drops to $ 31,000 as traders prepare for ‘rocky’ road and deeper decline

“When it rains” is a proverb that finds new relevance in cryptocurrency markets on May 9, with traders facing another day of pain and the current price drop of bitcoin (BTC) at its lowest level in 2022.

Data from Cointelegraph Markets Pro and TradingView show that the BTC slide on May 9 increased as the trading day progressed, with Bitcoin hitting a daily low of $ 31,000 and bulls sweeping their best to build a weak defense.

Here’s a look at some of the developments that led to May 9 price cuts and what traders can look for as the cryptocurrency market delves deeper into bearish territory.

Further reduction is possible

Bitcoin bulls have been struggling to establish a strong support floor for the past few months as the bears are still trying to drive the price down.

Currently, the price of BTC is down 50% from an all-time high in November, and the chain analysis firm Glassnode noted in a recent report that this decline is “still small compared to the final lows on bear markets previously. Bitcoin. “

As the chart above shows, the drawdown peaked at -54.2% in July 2021, with “bear markets 2015, 2018 and March 2020 capitalized at lows between -77.2% and -85.5% from an all-time high.”

Network profitability also declined to levels similar to those seen in late 2018 and late 2019-20 bear markets.

Glassnode notes:

“It should be noted that both incidents occurred prior to the final capitation event. Therefore, further reduction remains a risk, and would be within the historical cycle performance range.”

Operators take a risk-free approach

A closer look at the data on the chain shows that the capitalization of bitcoin holders has increased in the last few weeks as the price continues to fall.

Evidence of this capitalization can be found by looking at the dominance of Bitcoin exchange fees, which measures the percentage of fees on the Bitcoin network paid to deposit BTC on an exchange.

According to Glassnode, the sudden rise in bitcoin exchange fees is 15.2% the second highest level in history and “further supports the argument that bitcoin investors were trying to get out of the way.” collateral in response to market volatility. “

Further evidence of an increased risk outlook can be found by looking at stable dog supplies, which have declined in the last two months after rising from $ 5.33 billion to $ 158.25 billion since the market was sold in March 2020.

After peaking at $ 161.53 billion in early April, overall consignment supply declined by $ 3.285 billion as USD Coin (USDC) redemptions rose above inflows of all stable properties.

Glassnode said:

“Overall, there are some clear signs of weakness in space, many of which indicate that the risk-loss outlook remains at the heart of the market at this time.”

See also: Bitcoin hits lowest level since 2022 as analysts believe it is entirely possible to reach $ 24,000 price

Possibility to hold over $ 30,000

Recent market weakness has led many cryptocurrency traders to take a bearish stance and accept the possibility of a decline to $ 28,000, which has sparked the interest of some analysts, including trader Peter Brandt, who the following tweet about the change of mind.

Now that 28,000 have been widely accepted as a target below I am forced to change my mind. The price is over 30,000 or tank through 28,000

– Peadar Brandt (@PeterLBrandt) May 8, 2022

Now that 28,000 is widely accepted as a target below, I am forced to change my mind. The price is over 30,000 or crash down to 28,000. – Peter Brandt (@PeterLBrandt) May 8, 2022.

It remains to be seen what the future holds for BTC, but it’s best to be prepared for increased volatility as global macro events continue to put pressure on financial markets.

Glassnode says:

“Bitcoin remains strongly correlated with broader economic conditions, suggesting that the road ahead could unfortunately be rocky, at least for now.”

The global capitalization of the cryptocurrency market now stands at $ 1.467 billion and bitcoin’s dominance rate is 41.7%.

The views and opinions expressed herein are those of the author only and do not necessarily reflect the views of Cointelegraph.com. All investments and transactions involve risk. You should do your own research before making a decision.