The entire crypto market saw its first real bloodbath of 2021, as prices of Bitcoin and Ethereum fell by about 50% from it’s April peak of $64K, touching just under $30K before bouncing back up to around $36K.
Newcomers to crypto in 2020 also got their first real roller coaster experience, and based on on-chain data, many failed to have diamond hands, bought the top and sold for losses, while whales and institutions scooped up discounted bitcoin.
New Bitcoiners’ first real taste of volatility
It’s easy to stomach volatility when it’s on the way up. But it’s on the way down that the true believers will be revealed. Looking at the size of that monthly red candle will give any investor the chills.
We saw a high of $59.600, but that quickly withered away, and the bitcoin price fell off a cliff, dropping to a low of $30,066, before climbing back to close the month at $37,341.
Still, that represented a monthly drop of 35.37%. Compared to the April top of $64K to the low of $30K, we actually wicked below 50% losses.
Amidst ongoing narratives of energy usage, countries banning the mining and/or trading of bitcoin, and Elongate, which arguably started it all, it looks like we will be seeing some sideways action, unless something major happens. We have now seen 2 consecutive red monthly candles for Bitcoin. Let’s hope June will turn the tides around.
Ethereum outperforms bitcoin
As bitcoin suffers from the energy usage narrative, Ethereum is holding steady and not seeing as much losses.
Although we had a huge wick upwards and down, Ethereum did manage to climb back rather quickly to settle May prices quite close to April’s closing price.
In fact, for the entire see-saw in May, we only saw a decline of 2% compared to April as May came to a close.
Ethereum price has a lot going for it. With the ongoing transition from proof of work to a proof of stake infrastructure, Ethereum is going to end up using a lot less energy to maintain their network.
With EIP1559 update coming soon, the blockchain will also be introducing token burning mechanics and turning ETH into a more deflationary currency.
Given the many initiatives that are being implemented on the Ethereum blockchain, I’ve also recently come to a theory that ETH will soon surpass BTC in market cap.
I also believe this is not the end of the bear market, and perhaps this time, it will be ETH leading the way to recovery and beyond.