Bitcoin price peaks and dips, new Ether ETFs, and whale accumulations—what could these mean for Bitcoin’s future? Find out in our report.
Key takeaways:
- Bitcoin saw notable volatility in May, starting below $60,000 and peaking at $71,470 on May 20 on optimism around spot ETF inflows. However, it struggled to maintain momentum and ended the month at $67,000, reflecting cautious market sentiment.
- The launch of Ether ETFs affected Bitcoin’s market dominance, indicating a trend towards greater diversification among investors.
- A decrease in Bitcoin transfers from private wallets to exchanges, dropping from 70,999 to 32,450 between April 18 and May 31, indicates accumulation by large holders or “whales.” This trend points to a potential reduction in the circulating supply available for trading.
- Bitcoin’s ecosystem saw significant developments, including Jack Dorsey’s Ocean Mining Pool opening in El Salvador and Tether’s $150 million investment in Bitdeer Technologies.
- Bitcoin-based NFTs generated $192 million in sales volume in May, a 71% decrease from April. The number of NFT transactions on Bitcoin Ordinals exceeded 153,000.
What You’ll Find in This May Bitcoin Analysis:
What Is Bitcoin?
Bitcoin (BTC) is a decentralized cryptocurrency created to function as a digital currency and means of payment that operates independently of any single individual, organization, or authority. It eliminates the need for third-party intermediaries in financial transactions. Bitcoin is allocated to blockchain miners to validate transactions and can be purchased through various exchanges.
Unveiled to the public in 2009 by an enigmatic developer or group known as Satoshi Nakamoto, Bitcoin has become the most widely recognized cryptocurrency in the world. Its success has spurred the creation of numerous other cryptocurrencies.
BTC Price Performance and On-Chain Analysis
In May 2024, Bitcoin (BTC) price demonstrated both resilience and volatility, navigating a complex interplay of factors. Early in the month, Bitcoin was trading below the $60,000 mark. On May 20, BTC price reached $71,470, buoyed by optimism surrounding spot ETF inflows.
However, Bitcoin struggled to maintain momentum above $70,000 and fell to $67,000 by the end of the month, encountering resistance that highlighted cautious market sentiment.
Bitcoin’s dominance was challenged by the introduction of Ether ETFs, which diverted some investor interest away from Bitcoin. This competition highlighted the increasing diversification within cryptocurrency, with investors exploring alternative assets and opportunities beyond Bitcoin.
$BTC.D With the recent $ETH rally, we’ve seen #Bitcoin Dominance head back down.
This has been in an up trend for about 1.5 years and if there’s anything that could reverse this trend it would be ETH leading on the back of an ETF being approved.
52% and 48% are the main levels. pic.twitter.com/zQCOSMIsmn
— Daan Crypto Trades (@DaanCrypto) May 23, 2024
After peaking at $73,835 in March, Bitcoin entered a consolidation phase. According to Glassnode’s “The Week On-chain” report from May 28, BTC’s recent performance over the weekly, monthly, and quarterly time frames has been relatively muted compared to previous cycles.
Historically, BTC has shown robust price gains of over 20% within a 90-day window over these intervals, indicating a sustained uptrend. However, over the past quarter, only five days have achieved this level of increase, reflecting a more subdued market environment.
The recent sideways movement in BTC price coincides with a decrease in transfers from private wallets to exchanges. This suggests that large holders, often called whales, are accumulating Bitcoin. Between April 18 and May 31, the number of wallets depositing Bitcoin into exchanges dropped significantly. This decrease, from 70,999 to 32,450, may indicate that whales are buying and holding their BTC. It could potentially reduce the circulating supply available for trading and contribute to lower market volatility.
Other on-chain metrics and technical indicators in May suggested a potential for a bigger move in BTC price, albeit with a resetting of some metrics. Daily transactions increased by 71% between May 1 and May 26, reaching 852k. However, this recovery was short-lived, and the number of daily transactions dropped again by the end of the month, reaching 510k transactions on May 30.
The number of new Bitcoin wallets created dropped to its lowest level since 2018. This decline in new wallet creation could imply a slowdown in new user adoption or cautious behavior among potential new investors.
Bitcoin’s daily active addresses experienced significant fluctuations in May. Beginning at 461,000 on May 1, the number increased to 489,000 by May 13. However, this was followed by a steep decline to 296,000 by May 29.
In VanEck’s May 2024 Bitcoin ChainCheck report, the total value transferred on the Bitcoin network fell by 13% to $44.60 billion, yet it still ranked in the top 85% of all-time activity levels. Meanwhile, transaction fees dropped significantly by 78% to an average of $3.68, suggesting less network congestion as activity decreased.
On May 6, Bitcoin reached a significant milestone by surpassing one billion transactions processed. This achievement came about 800 weeks after Bitcoin’s inception, highlighting the network’s ongoing growth and durability. The high number of transactions demonstrates continued interest and reliance on Bitcoin as a decentralized and secure method for transferring value.
#Bitcoin has officially processed over 1 billion transactions. pic.twitter.com/kS704YYoW5
— Wicked (@w_s_bitcoin) May 5, 2024
Bitcoin’s futures open interest surged to its highest level in 16 months, reaching approximately $34,02 billion on May 30. This rise in open interest reflects heightened market engagement and speculative interest, signaling traders’ expectations of significant price movements.
May’s Bitcoin options market saw a substantial $6.5 billion in expiries, with a dominance of bullish positions. The prevalence of bullish options indicates that a significant portion of market participants were betting on price increases. This level of bullish sentiment in the options market often exerts upward pressure on prices, as traders adjust their positions and expectations in alignment with these options. The large-scale expiry of these bullish options underpinned positive market sentiment and reinforced the price floor around the $70,000 mark in May.
Spot Bitcoin ETFs
BlackRock’s Institutional Bitcoin Trust (IBIT) continued to lead spot Bitcoin ETF net inflows in May, holding more than 50% of the Bitcoin ETF market.
In a significant development for the European market, Bitcoin and Ethereum exchange-traded products were listed on the London Stock Exchange (LSE) following approval from the UK’s Financial Conduct Authority (FCA). The WisdomTree Physical Bitcoin ETP and the WisdomTree Physical Ethereum ETP were among the first crypto ETPs to be listed in the UK. These ETPs will be available exclusively to professional and institutional investors.
Conversely, in Hong Kong, Bitcoin ETFs experienced a dramatic reversal, with record outflows wiping out two weeks of inflows in a single day, on May 13. Bosera, ChinaAMC, and Harvest Global’s spot Bitcoin ETF funds posted net outflows of $32.7 million, with ChinaAMC’s Bitcoin fund coming in as the biggest loser on the day with $15.5 million in outflows, according to The Block data.
Bitcoin Mining Updates
The Bitcoin mining sector faced challenges from the recent halving event, while also seeing major investments and advancements in technology and geographic expansion.
Hashprice Peaks and Plummets
The halving reduced Bitcoin’s block subsidy from 6.25 BTC to 3.125 BTC. As a result, miners now earn approximately $209,375 per block from the emission of new Bitcoins, down from $418,750, based on current market prices.
Immediately following the halving, miners experienced a temporary surge in revenue from transaction fees, in addition to their earnings from newly minted Bitcoin. This boost was driven by a new token standard on Bitcoin called Runes, which led to an all-time high of over $80 million in transaction fees on April 20, 2024 – a striking figure given that miners earned approximately $797.7 million in total transaction fees throughout 2023.
This led to a brief spike in Bitcoin mining profitability. Hashprice – a key metric miners use to gauge the earnings potential of their operations – peaked at $173/PH/Day the day after the halving. However, as activity related to Runes and transaction fees declined, hashprice subsequently plummeted to a record low of $44/PH/Day on May 1.
Daily revenue from Bitcoin mining dropped to less than $3 million in May from a previous daily average of about $6 million, according to Blockchain.com data.
Jack Dorsey’s Ocean Mining Pool
Jack Dorsey-backed Ocean Mining Pool, a significant…
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