Market Wrap: Bitcoin Unable to Hold $30K, Altcoins Mixed

Bitcoin (BTC) failed to stay above $30,000 on Monday as some buyers remained on the sidelines. The cryptocurrency tumbled later in the New York trading day, indicating a loss of short-term momentum.

Alternative cryptos (altcoins) were mixed on Monday. For example, Fantom’s FTM token rose by as much as 16% over the past 24 hours, while Decentraland’s MANA token declined by 3% over the same period. Choppy trading conditions suggests some caution among crypto traders, especially over the past week.

For now, bitcoin is stuck in a tight trading range and is at risk of a breakdown. “From a trading standpoint, [a] breach higher may offer an opportunity to fade, targeting a break to fresh yearly lows,” Michael Boutros, an analyst at DailyFX wrote in an email to CoinDesk. If a breakdown occurs, Boutros has a downside target of $19,666 for BTC.

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Still, some analysts have noticed signs of capitulation, which could support a relief bounce in price. Sean Farrell, vice president of digital assets at FundStrat, stated that recent selling pressure was driven by spot market traders rather than futures traders. That suggests a large unwind of leveraged positions is unlikely, similar to what occurred in previous sell-offs.

Instead, BTC’s downtrend could be gradual, especially if macroeconomic headwinds continue to linger. “Despite the evidence of capitulation and waning investor sentiment, the current macro backdrop still poses significant headwinds for cryptoasset prices, Farrell wrote in a research note.

The U.S. Dollar Index (DXY) is roughly 3% below its recent high reached on May 13, which could offer support for BTC because of its negative correlation to the greenback.

Previous peaks in the DXY have coincided with price troughs in BTC. And last year’s acceleration in the U.S. dollar occurred alongside a failed breakout in BTC around $69,000, leading to a 60% drop in the cryptocurrency’s price.

The index’s performance is not a perfect signal for BTC, however, especially because of macroeconomic uncertainty.

The chart below shows the 90-day correlation between BTC and the U.S. dollar, which is mostly negative. Still, the correlation could rise during market turbulence, similar to what occurred in 2018 and 2020.

Most digital assets in the CoinDesk 20 ended the day lower.

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.