Bitcoin retraces below $27,400, wiping $60 billion from the crypto market cap

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(Kitco News) – The deeper correction that many had been forecasting for the crypto market arrived on Monday as congestion on the Bitcoin (BTC) network led to a pause in BTC withdrawals from Binance, sending crypto prices tumbling as investors grow frustrated with delayed transactions and increased transaction costs.

Stocks, likewise, were under pressure in trading to start the week as investors are now focused on the upcoming inflation report – which could provide a clue as to the future of interest rate hikes – and have grown increasingly anxious about the ongoing debt ceiling debate. At the close of markets, the S&P and Nasdaq finished in the green, up 0.05% and 0.18%, respectively, while the Dow was in the red, down 0.17%.

Data provided by TradingView shows that Bitcoin’s price began trending down with the opening candle on Monday, initially finding support at $28,000 before bears redoubled their efforts and managed to drop the top crypto to a low of $27,375 in the late afternoon. Bulls have since bid BTC back above $27,600, where they now battle bears for control of the price action.

BTC/USD Chart by TradingView

The weakness in BTC led to May Bitcoin futures trading “solidly lower in early U.S. trading,” according to Kitco senior technical analyst Jim Wyckoff, who said that “trading remains choppy and sideways in range.

BTC/USD futures 1-day chart. Source: Kitco

“The bulls and bears are back on a neutral overall near-term technical playing field,” Wyckoff said. “The direction in which prices move above or below the range, defined by resistance and support lines seen on the chart, will very likely be the direction of the next sustained trending price move.”

For the analysts at Eight Global, the tightening coil for Bitcoin means that a “decision time is nearing for BTC as there is only limited wiggle room left. Although there is a slight negative divergence, the chart pattern seems somewhat on the bullish side.”

BTC/USD 1-day chart. Source: Eight Global

But the fact that meme coins have been surging higher recently, with centralized exchanges more than willing to list the tokens and capture the trading fees, is a signal to Eight Global that the market has gotten frothy and is due for a significant correction.

“First, the market is just giving the Genslers of the world what they have been advocating all this time: crypto is an immature zoo and the apes are running loose again, time for some taming,” the analysts warned. “Also, meme coin rush & rugs don’t happen during market bottoms, they start close to (local) market tops.”

Eight Global said it’s possible that a major FUD (fear, uncertainty, and doubt) event is likely to emerge that could initiate the C wave outlined on the chart above, dropping the price of Bitcoin to sub-$25,000.

“It would not surprise me if the C wave I expect gets started by some sort of fud, Eight Global wrote. “Give the market the “reason” it needs for this oft-repeating corrective structure.” Until enough time passes to learn which way the price will move, Eight Global said, “long the support trendline,” take profits on winning long positions, and “short the resistance trendline.”

Altcoins get hammered

The turmoil for Bitcoin led to widespread losses in the altcoin market, with only six tokens out of the top 200 managing to post positive gains for the day.

Daily cryptocurrency market performance. Source: Coin360

RSK Infrastructure Framework (RIF) was the one notable exception to the downturn, with the token increasing by 12.13% to trade at $0.1627. Recent meme coin breakout star Pepe (PEPE) was the hardest hit by Monday’s downturn, decreasing by 35% to trade at $0.0000001847, while Magic (MAGIC) declined by 16.88% and SingularityNET (AGIC) fell by 15.31%.

The overall cryptocurrency market cap now stands at $1.134 trillion, and Bitcoin’s dominance rate is 46.9%.