After four days of trading below $30,000, bitcoin surged back above $30,000 today, peaking at $30,192.
Among the top 100 listed by market capitalization, only 9 saw a slight decline, while the remaining 91 maintained a positive trend. Among them, ETH rose back to a high of $1,879 after hitting a bull market low of $1,704 on The 27th, with a daily increase of 3.27%.
However, from the performance of the market, this wave of rising market prices did not improve the market worry, investors panic instead increased.
According to MyToken data, bitcoin today's fear and greed index is 10, the level of extreme panic, and yesterday was 14, the panic level is rising, the market bearish dominate.
Why the market picked up, but the panic intensified?
The following factors may be important to the market's lack of confidence:
First, the continuous decline of the market, resulting in a blow to market confidence, a small rise is difficult to change this market state.
Bitcoin has fallen for nine straight weeks, its longest streak on record.
The S&P and NASDAQ are trading up about 10 per cent since their May 20 lows, while BTC and ETH are both trading lower and are down about 22 per cent this month, according to QCP Capital.
Second, a sustained and sharp decline has greatly reduced the profitability effect of cryptocurrencies, thus making the sector less attractive, and the number of bitcoin holding addresses has also declined.
The percentage of profitable addresses for ETH reached a 22-month low of 57.31%, according to Glassnode.
The cryptocurrency market has come under downward pressure since the start of the year, resulting in a loss of nearly $1tn in market value and a decline in the number of Bitcoin (BTC) addresses valued at $1m or more.
According to BitInfoCharts.com, the number of BTC addresses with balances of more than $1 million as of May 28 was 77,936, of which about 5,856 had a total balance of about $10 million. The number of bitcoin addresses with more than $1 million dropped 21.34 percent from the start of the year, to 99,092 on January 5.
Third, the decline and profit effect of the decline, resulting in a decrease in the degree of market activity, thus reducing the basis for rising prices.
On May 27, there were about 468,000 daily active addresses on The Ethereum network, according to Oko Cloud Link. A year earlier, in May 2021, ETH prices reached an all-time high and the daily active addresses of Ethereum reached 980,000. That means the number of daily live addresses on Ethereum has fallen by about 50 per cent over the past year.
In addition, the decline in stablesoin trading volume indicates that the market demand for cryptocurrencies is weakening, which may be an important factor in the poor performance of the market.
According to Glassnode data, the average daily volume of USDT reached an 8-month low, with a seven-day average of 44,874.965 USDT.
Fourth, more importantly, the current economic situation is not optimistic, the economic recession is obvious, inflation pressure continues to be troubled, the monetary tightening policy is very controversial, bring great uncertainty to the market, thus aggravating investors' concerns, it is difficult to inject vitality into the market.
The debate at the European Central Bank over how much to tighten monetary policy is likely to intensify this week as the quiet period before policy decisions approaches and economic data is expected to show another record inflation rate. All but one of the economists surveyed expected prices to rise more this year from a year earlier, with a median forecast of 7.8 per cent. Of the big four eurozone economies, only Spain is likely not to see inflation accelerate. The next policy meeting is June 9, and ECB officials will enter a quiet period starting Thursday.
To sum up, it is difficult to see inflection point in the short term for cryptocurrency market, and the downward shock may still be the mainstream.
Some analysts, however, are optimistic about the cryptocurrency market, even predicting that bitcoin will reach a record high of $250,000 next year.
According to MarsBit News, in a recent interview with renowned cryptocurrency trader Scott Melker, US investor Tim Draper predicted that more women will start using Bitcoin, which will significantly expand the cryptocurrency's user base. Given that women control about 51 percent of the wealth in the United States, it's not far-fetched to predict that they could significantly drive up the price of Bitcoin.
According to prominent venture capitalists, retailers have yet to realize that they can save 2% by accepting Bitcoin instead of bank-issued credit cards. That could double their profits because they are so thin.
Draper again predicts bitcoin will reach $250,000 by early 2023.
However, this forecast is difficult to resonate with the market, the crisis has not improved, investors are still in the negative mood caused by the fall.