- A flash crash was triggered by fake news about the alleged sale of 9,800 BTC by the U.S. government.
- The congestion of the Bitcoin and Ethereum blockchains has caused uncertainty in the crypto market.
- Unconfirmed rumors concerning Binance US and Grayscale have been circulating.
The recent deep pullback of Bitcoin is not without its complexities. While good news on Wednesday, May 10th, about the continued fall of the CPI drove the Bitcoin price to as high as $28,317, fake news about an alleged sale of 9,800 BTC by the U.S. government hit the market, causing a flash crash that it has yet to recover from.
Uncertainty and Bearish Pattern Fuel Bitcoin Market Dump
Uncertainty is currently quite high in the Bitcoin and crypto market, with the DXY hovering above historically crucial support at 101.8.
Sponsored
The departure of Jump and Jane Street from the U.S. crypto market due to regulatory uncertainty has made the liquidity problem worse. This, in turn, has led to higher volatility as larger buy and sell orders move the market faster.
Adding to the uncertainty is the bearish head and shoulders pattern on Bitcoin’s 1-day chart, which is causing fear among traders that it may signal a crash to $25,000.
Bitcoin Blockchain Congestion and Grayscale’s Debt Rumors
The already tumultuous environment surrounding Bitcoin has been further complicated by the clogging of its blockchain due to the influx of Ordinals and the controversial BRC-20 meme coins. A portion of the community perceives these coins as a distributed denial-of-service (DDoS) attack, adding to the uncertainty.
Meanwhile, Grayscale is being hotly debated because DCG supposedly owes bankrupt crypto lender Genesis Trading about $575 million in May, with loans coming due next week. The rumor says that Grayscale may be selling something on Coinbase to cover the capital needed to repay the loan.
At the time of writing, the Bitcoin price stood at $26,340, initially receiving support from the 100-day EMA. The popularity of Bitcoin Ordinals transactions is declining, with trading volume dropping for three consecutive days after reaching an all-time high of $18.13 million on May 8th.
On the Flipside
- The departure of US market makers Jump and Jane Street could lead to more decentralization and ultimately a stronger crypto market.
- The congestion of the Bitcoin and Ethereum blockchains highlights the need for continued development of scaling solutions.
- The decline in popularity of Bitcoin Ordinals transactions suggests a shift towards more sustainable and efficient transaction methods.
Why You Should Care
Each of the factors driving the current crypto market downturn has the potential to cause long-term effects on the industry. The departure of major market makers, regulatory uncertainty, and congestion on the blockchain all contribute to the current volatility.
To learn more about how the upcoming US CPI data could impact the Bitcoin market surge, check out this article:
Understanding the Upcoming U.S. CPI Data Amid Bitcoin’s $27.5k Surge
For insights into the recent clash between Ripple CEO Brad Garlinghouse and Venture Capitalist on the security status of XRP, read this article:
Garlinghouse Clashes with Venture Capitalist on XRP’s Security Status
