Macroeconomic negative factors continue to ferment, Bitcoin may weaken in the short term and test $26,000

After nearly half a month of sluggish consolidation, the crypto market retreated further due to the impact of UK inflation data, the latest Federal Open Market Committee (FOMC) meeting minutes, and US Treasury Secretary Yellen's latest warning on the US debt ceiling deadlock. Bitpush terminal data shows that as of press time, the trading price of Bitcoin fell below $26,400, down about 3% in the past 24 hours, close to the lowest level since May 12.

Macro uncertainty in many aspects

Crypto markets plunged early Wednesday after the latest U.K. consumer price index (CPI) for April rose to 6.8%, above expectations of 6.2%, reaching its highest point since 1992. Disappointing CPI means the Bank of England will have to continue its recent policy of raising interest rates, which would typically hit crypto markets.

It also did little to boost market confidence after the latest Federal Open Market Committee (FOMC) minutes showed that U.S. central bank officials were divided on whether to continue raising interest rates.

On Wednesday, U.S. House Speaker Kevin McCarthy said debt ceiling talks were still hanging in the balance - eight days before the U.S. faces the risk of defaulting on its debt obligations. He also said he believed negotiating teams could make progress on Wednesday.

Since the beginning of May, as the market has been weighing the U.S. government debt ceiling negotiations and ongoing cryptocurrency regulation and macroeconomic uncertainty, BTC has struggled with low trading volume and volatility, and the trading price has remained in the range of $26,500 to $27,500.

Ruslan Lienkha, head of markets at fintech platform YouHodler, said in a blog post that “heightened tensions in financial markets” had hit stocks and digital assets.

"U.S. stock indices are under selling pressure as concerns grow about a possible U.S. default: authorities are less than 10 days away from reaching some kind of agreement, and we have yet to see any progress in these negotiations," Lienkha wrote. "All this uncertainty forces financial institutions to restructure their assets and prepare for a possible default, which puts additional pressure on participants in financial markets."

The crypto market follows the U.S. stock market. David Wells, CEO of Encl ave Markets , told CNBC: "Although cryptocurrency is a global market, trading volume has rebounded significantly during the U.S. trading session, so sometimes big crypto fluctuations follow big stock fluctuations driven by macro."

Some analysts believe that even if the U.S. government is able to raise the debt ceiling before the June 1 deadline, risky assets such as stocks and cryptocurrencies may be affected because the issuance of new U.S. Treasury bonds will deplete market liquidity.

For example, U.S. money market fund assets hit a new record of $5.8 trillion this week as investors turned their attention to short-term debt securities, according to Reuters . Fixed-income mutual funds, a major source of funding for corporations and municipalities, have seen $615 billion in net inflows so far this year.

Deribit : Implied volume remains at lowest level

Luuk Strijers, chief commercial officer of crypto futures and options exchange Deribit, tweeted that $3.6 billion worth of Bitcoin and Ethereum options contracts will expire on Deribit this Friday, but the impact may be minimal as the market is experiencing one of the lowest volatility levels of the year.

Strijers said that with a put-call ratio of 0.38, there are probably more than two and a half times more outstanding calls than puts. The amount of options expiring is considerable, but it does not mean that the market has reason to panic.

He said: "Implied volume remains at its lowest levels, with DVOL (Deribit Bitcoin Volatility Index) at 50 for Bitcoin and Ethereum, while short-term volume is even lower, but has climbed slightly, with Bitcoin and Ethereum at the same level, which is rare historically. We saw a similar lowest implied volatility (IV) situation in January this year, followed by a big surge."

BTC 24-hour price chart hints at downtrend

The 24-hour price chart tracked by crypto analyst Ann Mugoiri shows that the bearish momentum is increasing and the price of Bitcoin has been steadily declining. The bears have successfully controlled the market, pushing BTC/USD down to a low of $26,106.

Furthermore, BTC’s Relative Strength Index (RSI) value of 37.79 and the recent break below its signal line indicates that BTC is currently in a bearish market, which is a potential profitable buying opportunity for investors who are looking to take advantage of the current market conditions. The Bollinger Bands are also narrowing, which suggests that volatility is decreasing and consolidating within a range. The upper Bollinger Band is at the $28,886 mark, while the lower Bollinger Band is at $25,908. The moving average indicator (MA) also shows a bearish sentiment as the 50-day MA has crossed below the 100-day MA.

The 24-hour Bitcoin price analysis chart shows that Bitcoin is in a strong downtrend, with bears dominating the market. BTC/USD has formed a series of lower highs and lower lows, indicating that selling pressure is intensifying. Ann Mugoiri believes that if it falls further, it may test the $26,000 level. The market continues to be under the control of bears, and any signs of recovery are still a long way to go.