- Bitcoin recorded its first monthly decline in May 2023, attributed to caution amongst investors, market volatility, and regulatory factors.
- There is a growing regulatory crackdown with increased scrutiny on the crypto industry.
- The declining price of Bitcoin in May reminds us of the available challenges and risks associated with the crypto market.
The world’s largest cryptocurrency by market capitalization has finally recorded the first monthly close in the red, signaling a cooling off after a few months of revival this year.
Considering this slump and mixed speculations in the world, data from Coinmarketcap shows that Bitcoin drooped 2.35%, recording a $27,124 opening on June 1, 2023. The weekly gain, however, recorded a positive of 3.78%. Bitcoin lost ground by 4.96% in May, the first monthly loss since the beginning of the year.
BTC/USD Monthly Chart
Immediate resistance sits at the $30,000 mark, a level that rejected the big crypto in March, April, and December 2020. The most significant barrier lies within the $38,183 and $47,243, which left the price in May 2022, triggered by the collapse of the Terra ecosystem, setting BTC on a free fall to $15,000.
If this barrier is shattered, it would confirm a bullish breakout on the monthly time frame. If that happens, Bitcoin could rise to reach the all-highs at $70,000 or rise above that to new record highs.
If this will happen in 2023, it remains to be seen. Many factors could derail the uptrend, including the runaway inflation rates and the increasing regulatory crackdown on digital assets, especially in the U.S.
Increasing regulations and concerns
In recent months, governments worldwide have doubled down on their efforts to regulate the crypto space. China, for instance, has intensified scrutiny on Bitcoin mining resulting in a drastic decline in the cryptocurrency’s value.
The strictness and regulatory scrutiny on digital assets in China dampened crypto investments as venture capitalists fear progressive market interference from many other countries.
In the U.S., the justice system promised to crack down on illicit behaviors on crypto exchanges earlier in May. Eun Young Choi, director of the Department of Justice’s National Cryptocurrency Enforcement Team, Said;
“The Department of Justice is cracking down on crypto exchanges that allow criminals to profit quickly from their crimes and cash out.”
In Argentina, the central bank banned cryptocurrency transactions, a step that has kept crypto adoption on a declining trend for the past year in the Latin American country.
Investor Caution and skepticism weigh down crypto prices
In late March, the Investor Education and Advocacy office under the U.S. Securities and Exchange Commission (SEC) warned people to take caution when investing in crypto assets.
They said in a statement that:
“Securities and crypto assets can be exceptionally volatile and speculative.”
The statement further clarified that the risks associated with crypto investment could be very significant.
Bitcoin and other major cryptocurrencies have been on a downtrend after this advice from the SEC, suggesting that several investors might be treading carefully about crypto investments.
Generally, crypto prices remain volatile even after showing signs of recovery earlier in the year.
Many investors remained skeptical in May because, in the preceding months, the crypto prices had recorded excellent results, leaving investors worried about a potential bubble.
When the market cooled down and the prices began to correct, investors shied off, with some hesitant to make further investments. The market players instead started asking about the viability of cryptocurrencies.
These factors made Bitcoin dig deeper in May, resulting in the first monthly decline since the start of the year.
At the time of writing, Bitcoin trades at $27,164. Immediate support on the monthly time frame sits at the $25,500 level, embraced by the 50 Simple Moving Average (SMA). Losing the level would set the following support line at $15,000, where the 100 SMA currently sits.
At the moment, the Relative Strength Index (RSI) is flattering out, indicating that the pioneer could remain in consolidation for the short term before establishing any directional bias.
