Cryptocurrency Markets Face Headwinds as Bitcoin Dips Below $106,000
The cryptocurrency market is experiencing increased headwinds as markets digest uncertainty surrounding tariffs in the United States. Bitcoin (BTC) is extending losses below $106,000, while major altcoins, including Ethereum (ETH) and Ripple (XRP), are testing critical support areas.
Macroeconomic Risks Rise Amid Tariff Uncertainty
Sharp pullbacks characterized cryptocurrency trading as a federal appeals court suspended the decision that had overturned President Donald Trump’s tariffs. The move came at the request of the Justice Department.
The Court of International Trade stated that the U.S. Constitution grants Congress the exclusive power to regulate commerce with other countries. This authority cannot be overridden by the president’s emergency powers to safeguard the economy.
The Trump administration has labeled the decision “judicial overreach,” according to The Washington Post. Global markets reversed gains accumulated on Thursday amid growing uncertainty about U.S. tariff policy.
Market volatility could persist over the weekend, depending on how investors react to the Personal Consumption Expenditures (PCE) Price Index data, expected later today.
The PCE Price Index reflects inflation across a broad range of consumer spending and changes in consumer behavior. Market participants use PCE data as a clue to the Federal Reserve’s (Fed) future direction, especially as the window for interest rate cuts narrows.
Bitcoin ETF Spot Outflows Recorded After 10 Days of Inflows
The rally toward a new all-time high of $111,980 was primarily driven by institutional risk sentiment. Bitcoin spot Exchange Traded Funds (ETFs) recorded inflows for ten consecutive days, from May 14 to May 28. Demand from institutions building Bitcoin treasuries, such as Strategy and Metaplanet, also contributed to the rally.
However, data shows outflows of $359 million, breaking the ten-day inflow trend. This reflects changing dynamics in the broader market, especially with U.S. tariffs and geopolitical tensions in Europe and the Middle East.
The current Bitcoin bull market shows significantly lower volatility compared to previous cycles. Data reported by CoinDesk indicates that realized volatility averages below 50% on a three-month moving basis, significantly lower than the 80% to 100% range seen during past bull markets.
Bitcoin’s stability largely comes from its increasing market capitalization and rising institutional interest, supported by ETFs and derivatives offerings.
“The launch of spot ETF products in the U.S., complemented by increased regulatory clarity, has altered the underlying composition of the investor base, allowing sophisticated institutional investors and capital to gain exposure to Bitcoin for the first time,”
Glassnode stated in a recent report.
Bitcoin Price Extends Losses Below Key Support
Bitcoin’s price is extending losses below $106,000, reflecting increasing selling pressure. Key technical indicators, such as the Moving Average Convergence/Divergence (MACD), reflect the new bearish outlook.
As the MACD indicator descends toward the center line (0.00) after validating a sell signal on May 25, when the blue MACD line crossed below the red signal line, traders are encouraged to sell BTC, contributing to the broader sell-off since Bitcoin reached new all-time highs on May 22.
The Relative Strength Index’s (RSI) downtrend from recent overbought levels, as it approaches the 50 midline, consolidates the increasing bearish influence in the market. Key areas of interest include short-term support at $105,000 and the area around $102,500, which was tested as support in mid-May and resistance in early January.
Altcoins have been overshadowed by increasing selling pressure, potentially threatening gains accumulated in May. Ethereum is testing support at $2,600, currently around $2,605. The MACD and RSI indicators are trending downward. If this technical outlook remains unchanged and the MACD indicator approaches the zero line (0.00) while maintaining a confirmed sell signal from May 22, the path of least resistance will continue downward as the weekend approaches. The RSI at 62, after falling from the overbought region, signals a fading bullish momentum. Key areas of interest include the 200-day Exponential Moving Average (EMA) at $2,445 and the 50-day EMA at $2,277.
XRP has not been spared, with losses of over 2% on the day. The cross-border money remittance token is trading at $2.19, after losing two critical support levels: the 50-day EMA, currently at $2.29, and the 100-day EMA, which stands at $2.26.
The next area of interest, especially for traders focusing on dips, is the 200-day EMA at $2.07. Beyond this level, declines could accelerate, bringing attention to the April 7 low at $1.61 and the liquidity-rich region at $1.00.
Cryptocurrency Metrics FAQs
The developer or creator of each cryptocurrency decides the total number of tokens that can be minted or issued. Only a certain number of these assets can be minted through mining, staking, or other mechanisms. This is defined by the algorithm of the underlying blockchain technology. Since its creation, a total of 19,445,656 BTC have been minted, which is the circulating supply of Bitcoin. On the other hand, the circulating supply can also decrease through actions such as token burning or mistakenly sending assets to addresses of other incompatible blockchains.
Market capitalization is the result of multiplying the circulating supply of a given asset by its current market value. In the case of Bitcoin, the market capitalization exceeds $570 billion, which is the result of the more than 19 million BTC in circulation multiplied by the price of Bitcoin, which is around $29,600.
Trading volume refers to the total number of tokens of a specific asset that have been traded or exchanged between buyers and sellers within a set trading schedule, for example, 24 hours. Used to measure market sentiment, this metric combines all volumes from centralized and decentralized exchanges. Increased trading volume often denotes demand for a particular asset, as more people are buying and selling the cryptocurrency.
The funding rate is a concept designed to encourage traders to take positions and ensure that perpetual contract prices match those of spot markets. It defines a mechanism for exchanges to ensure that future prices and periodic price payments converge regularly. When the funding rate is positive, the perpetual contract price is higher than the market price. This means that traders who are bullish and have opened long positions pay traders who are in short positions. Conversely, a negative funding rate means that perpetual contract prices are lower than the reference price, so traders with short positions pay traders who have opened long positions.
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