Bitcoin closed May down just over 7%, marking the first negative month for the market’s top cryptocurrency since last December.
This drop also marks the worst month for BTC since the collapse of the crypto exchange. FTX which triggered a 16% price drop last November.
But this 7% drop represents an improvement from its performance in May 2021 and 2022, during which Bitcoin lost 35.38% and 15.56% respectively.
Bitcoin is currently trading down around 1.28% from Wednesday, with its advance slowed by a combination of negative macro factors as the US Dollar surges following the release of US jobs data which fell. turned out to be stronger than expected. The aggressive speech of the Federal Reserve Bank (FED) and technical sales also contributed to a drop in its price.
Bitcoin recently failed to break above its 50-day moving average, confirming a downtrend from the April/early May highs. Analysts believe that a retest of the recent lows below $26,000 could come into play.
How does the Bitcoin price outlook look for June?
Historical data indicates that June is generally the worst month of the year for Bitcoin in terms of performance.
Since 2011, Bitcoin has only “appreciated” at an average of around 7% in June, and only September and August saw lower average appreciation.
An even more concerning fact is that over the past three years, Bitcoin has seen an average price drop of 15.6% in June.
While it might be a bit excessive to anticipate a price drop of more than 15% in June, technical analysis suggests that the price trajectory remains on the downside for now for the month ahead.
The above chart analysis suggests that Bitcoin is in a medium-term downtrend, an assumption supported by recent changes in the macro environment.
Over the past few weeks, US employment, service sector and inflation data remained stronger than expected, pushing back the possibility that the FED could lower its interest rate levels.
Comments from FED policymakers have forced markets to reassess bets on both rate cuts in the second half of 2023 and those on a US recession.
These events provided decent support for the US dollar and propelled US yields (2 and 10 years, for example) above recent multi-month ranges.
While optimism around AI and a reduction in US recession bets have kept US stock prices (especially for the big tech names) soaring, which would normally help Bitcoin, a stronger dollar and higher yields were decisive factors on the price of the cryptocurrency.
If data on jobs, inflation and economic activity ahead of June continue to paint a picture of a resilient U.S. economy still facing unacceptable inflationary pressures, another Fed rate hike is likely in June, and the price of Bitcoin may well see another drop.
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