May was a brutal Month for all Markets. Cryptocurrencies experienced heavy losses on the back of the Terra Luna Stable Coin collapse. Huge losses were incurred across all major Funds and Institutions as there was no exit once the price began its decline.
Many had huge holdings of Terra to say nothing of their Leveraged Long Positions. The DOW posted 8 consecutive red weekly candles for first time in over 100 years. Bitcoin also posted 9 consecutive red weekly candles for the first time its history.
Amongst the major Cryptocurrency players:
Gemini (The Winklevoss Twins) lost $2.2 Billion, Coinbase (the largest US Exchange) saw shares plunge 84% since April 21st. FTX’S Sam Bankman-Fried’s fortune down 50%. Mike Novogratz’s Galaxy Digital (one of the largest advocates of The TerraLuna Stable Coin saw value down from $8.5 Billion to $2.5 Billion.
When will Crypto Markets Recover
On a Macro Level it is unlikely the bottom is in, and while we may see the low find long term support at the current low of $25,000/Btc, it is possible we see $22k over the next 2-3 months. In the interim, a short term rally to $35k seems likely. As The US approached Mid-Term Elections, it is historically likely we see a rally, but global events continue to drive inflation at an alarming rate.
Bitcoin remains strongly correlated to stocks, but also inversely to The Value of The US Dollar (DXY). The latter appears to have topped mid May, while The Dow continues to fall. This leaves analysts wondering whether a flight (in part at least) is beginning into BTC as more countries look to adopt the Bitcoin Standard, as well as the possibility of Russia including Bitcoin as a means of payment for Oil and Gas.
It remains the case that Bitcoin is seen as a Risk-on-Asset, but some who think the bottom is in, may be adjusting that view seeing BTC as a store of value and hedge against weak currencies and inflation.