Spooked Bitcoin investors worry sub-$60,000 price is just the beginning

Spooked Bitcoin investors worry sub-$60,000 price is just the beginning
Markets
Bitcoin fell to below $58,000 over the past 24 hours, but things could get worse. Credit: Shutterstock / Shutterstock.AI
  • Bitcoin fell below $60,000 on Tuesday.
  • However, analysts expect that prices could fall as low as $55,000.

Bitcoin dropped to below $60,000 on Tuesday, but analysts expect that things will get worse over the next month.

Analysts at research firm CryptoQuant made the warning as investors are making fewer bullish Bitcoin trades. Prices could fall as low as $55,000 this month.

May has typically been a bad time to invest in cryptocurrencies, K33 Research said in a new report.

That’s even without other factors that have weighed on prices, including stubborn inflation and growing geopolitical tensions.

Funding rates

Investors are more reluctant to take on additional risk than they were at the beginning of the year, K33 said.

This can be seen in how funding rates for perpetual futures contracts have dropped to their lowest point since 2024 began.

Traders are less willing to pay for opening long positions, and sell orders have now outpaced buy orders, according to CryptoQuant.

When funding rates are positive, it generally indicates a bias for further price rises, whereas negative funding rates typically suggest bearish sentiment among traders.

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Bitcoin’s weighted average funding rate is hovering close to neutral at 0.0097%, CoinGlass data shows.

Open interest

Open interest for Bitcoin futures contracts on the CME is also declining, suggesting bullish investors are exiting the market, K33 said.

‘Sell in May’

Historical trends also weigh on traders.

Over the past five years, investors who bought Bitcoin on May 1 and sold it on September 30 would have seen cumulative returns of around -29%, K33 Research said.

Conversely, the same trader who opted to buy on October 1 and sell by April 30 would have netted around 1,449% over the same period — suggesting traders are better off to “sell in May, and stay away,” if the pattern repeats in 2024, K33 wrote.

Sebastian Sinclair is a markets correspondent for DL News. Have a tip? Contact Seb at sebastian@dlnews.com.

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