The cryptocurrency market corrected sharply on May 12 after the hype about dog-themed tokens was weakened when Ethereum co-founder Vitalik Buterin raised huge amounts of the previously hot Shiba Inu (SHIB), Dogelon Mars (ELON) and Akita Inu (AKITA) the market brought the market and donated the proceeds to charity.
Data from Cointelegraph Markets and TradingView show that Bitcoin (BTC) price continued its recent weakness in meme token sell-offs, falling nearly 8% to $ 53,500 before rebounding to $ 54,700.
BTC / USDT 4-hour chart. Source: TradingView
Ether (ETH) was less affected by the sell-off and actually managed to bounce back over $ 4,000 to reclaim its daily losses as users of the network applauded Buterin’s decision to donate its meme coins to various charities. Traders also hope that the decreased trading activity in meme tokens will help lower gas fees on the Ethereum network.
Traders are unsure of what’s next for Bitcoin and Ether
As meme token trading activity subsides, traders can turn their attention back to Bitcoin, but there is some level of uncertainty about what might happen next.
According to Chad Steinglass, head of trading at crypto capital markets firm CrossTower, “BTC is actually doing a decent job as a store of value,” especially when compared to broader financial market developments, including the serious pressures that growth stocks have been “fueled by the.” CPI pressure from May 12th, which is interpreted as trigger for an earlier tightening of the Fed. “
Steinglass highlighted the fact that Bitcoin’s struggle to escape the trading margin it has been in for 3 months could be a symptom of its new role as a store of value, and he hypothesized that traders, who hold BTC in their investment portfolios, “sell BTC and” especially GBTC to increase cash liquidity as they lower their overall debt. “
Stone glass said:
“BTC has largely held its own against this headwind. There has been some quick move but has had strong support on each really significant sell-off. Maybe it really matures into a more stable asset, at least for now. “
Regarding Ether, Steinglass pointed out that “ETH is in a new regime of pricing” due to “upcoming changes to the protocol that will both eliminate inflation and create incentives to hold tokens to prove stake,” which it does makes it difficult to know what a “good new fair value for ETH” will be.
Regarding ether, Steinglass said:
“We could easily have more room to run, but if there are issues with the upgrades that could quickly make things fail.”ETH / USDT 4-hour chart. Source: TradingView
David Lifchitz, Managing Partner and Chief Investment Officer at ExoAlpha, gave further insights into the prospects for Ether, referring to the “hot run” of Ether in 2021, in which the price has increased by more than 455% and 100% since the beginning of the year. has risen% rally over the past three weeks, potentially serving as a “buy the rumor, sell the news setup” ahead of the upcoming EIP 1559 upgrade in July.
“If you’re only a few weeks old, it wouldn’t hurt to take something off the table. What hurts in the long run is not to miss the last climb, but to stay invested when the music stops. “
And as for Bitcoin, Lifchitz highlighted concerns that BTC’s area-bound trading has recently gotten stuck.
Lifchitz said Bitcoin currently shows:
“No upward (or downward) catalyst in sight, the risk of remaining fully exposed far outweighs the potential return.”
Financial markets are falling due to fears of inflation
Equity markets also sold off on fears of rising inflation, which has risen across many sectors of the economy.
Recent consumer price index data shows that prices have risen the fastest since April 2007, and some economists warned the metric shows no signs of slowing for the foreseeable future.
As a result of this pressure, the S&P 500, Dow and NASDAQ saw significant declines on Wednesday, closing the day down 2.14%, 1.99% and 2.67% respectively.
Despite the market downturn, altcoins like AAVE gained 30% while Polygon (MATIC) and Kusama (KSM) both rose 18%.
Daily performance of the cryptocurrency market. Source: Coin360
The total market cap for cryptocurrencies is now $ 2.414 trillion and the dominance of bitcoin is 42.2%.
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