The price of bitcoin has dipped back below $30,000 amid warnings that the crypto market will likely see unusual volatility over the coming weeks.
After hitting an 18-month low below $27,000 in mid May, bitcoin finished the month strongly by bouncing back by 18 per cent. Any hopes of a sustained recovery were ended by yet another mini crash at the start of June, dropping 7 per cent on Thursday.
The latest drop follows the publication of a note by Sean Farrell, head of digital asset strategy at Fundstrat, who predicted that public holidays in the US, UK and Europe this week could cause the market to “get weird”.
Low trading volumes “could lead to large price swings, and potentially further volatility to the downside in the immediate term,” he wrote, according to Bloomberg.
Similar trends were seen during Memorial Day periods in 2020 and 2021, with this year’s holiday coinciding with a double bank holiday in the UK for the Queen’s Platinum Jubilee.
Fundstrat’s longer term outlook remains positive, with Mr Farrell expecting “tides to shift” in the second half of 2022.
This is in line with recent forecasts made by strategists at JPMorgan Chase, who wrote in a note to investors that there was “significant upside potential” following one of the biggest price crashes in bitcoin’s history.
The overall crypto market has lost more than $1.5 trillion worth of value over the last seven months, tumbling in tandem with plunging tech stocks and compounded by the collapse of Terra’s UST stablecoin and LUNA cryptocurrency at the start of May.
“Crypto’s trajectory in May was shaky to say the least following the LUNA collapse, coupled with general turmoil in the financial markets. The steep decline rocked investors’ confidence but there’s reason for cautious optimism,” Sam Kopelman, a manager at the cryptocurrency exchange Luno, told The Independent.
“Although bitcoin finished May down 18 per cent, it has proved its strength as the preferred cryptocurrency throughout the market turmoil, and has now captured almost 46 per cent of the crypto market.”