Bitcoin price predictions: Will the current decline continue?

The price of Bitcoin dropped to its lowest level since February 27 yesterday, starting Thursday’s trading at $57,405, as the acceleration of the new decline extended for the third consecutive day, supported by fading expectations of future Federal Reserve interest rate cuts.

As a reminder, seasonally, May is not a good month for Bitcoin and the digital market. Over the past 13 years, Bitcoin has dropped an average of 20% each time.

CryptoQuant hasn’t shown any signs of weakness from Bitcoin miners despite the halving of block rewards. Mining has become dangerously centralized, with only one organization holding the mined cryptocurrencies through nine major pools, controlling about 47% of the network’s hash rate collectively.

Outflows from Bitcoin exchange-traded investment funds have continued for five consecutive days. Since the approval of these products on January 11, cumulative investment volume has reached $11.94 billion. In April, there was a multi-directional flow pattern.

I believe the enactment of the cryptocurrency payment law in the United States will allow banks like JPMorgan to enter the “crypto” market. It’s worth noting that one of the main reasons for Bitcoin’s decline is the former CEO of Binance, Changpeng Zhao, being sentenced to four months in prison after the U.S. Department of Justice demanded a three-year prison sentence.

Also, in my opinion, it’s likely that the rise in interest rates has supported the dollar and put pressure on Bitcoin over the past month. The Federal Open Market Committee statement expressed concern about inflation yesterday but did not rule out interest rate cuts. Therefore, the expectation of future interest rate cuts could significantly support Bitcoin prices and cryptocurrency markets.

Looking back at the current downturn, we see the price drop from its all-time highs in March this week amid rising risk aversion sentiment. This led to a more than 10% decline in Bitcoin over the week, making April 2024 its worst month since November 2022.

Bitcoin futures markets were also not priced in Hong Kong this week, so I expect a strong recovery in cryptocurrency later this year, but in the short term, its price may continue to decline over the next few weeks due to market pressures and geopolitical events.

I also expect to see stability for a month or two in Bitcoin prices, trading in a volatility range of $10,000 on both sides and perhaps the positive impact of the halving, which led to a decrease in Bitcoin supply, will show in the latter months of this year or even early next year.