Bitcoin Holds Monthly Gains Despite Price Dip: What to Know

US PCE Data Falls Short of Expectations

According to on-chain data, BTC/USD remained stable at the end of the month, rebounding from its weekly lows. The earlier drop was caused by concerns about a cryptocurrency exchange hack in Japan and aggressive trading at the end of the month.

The most recent macroeconomic data from the United States, represented by the Personal Consumption Expenditures (PCE) index, failed to significantly boost market sentiment despite slightly exceeding expectations. The data showed slowing inflation, which many expected to have more impact on the markets.

Market Reactions and Bitcoin’s Performance

Before the release of the PCE data, price downtrends were notable, primarily driven by traders unwinding positions in anticipation of the report. Skew, a well-known trader, emphasized the importance of monitoring market flows, particularly spot market activity, to predict future price trends.

Skew stresses the importance of increased spot bidding and demand in maintaining higher prices while warning that a lack of such activity could result in fear-of-missing-out (FOMO) hedges and potential market traps. Following the release of the PCE data, Bitcoin’s price experienced a reversal to around $66,650 but still maintained an 11% gain in May.

Michaël van de Poppe, founder and CEO of MNTrading, stated that the leading cryptocurrency is consolidating well and preparing for further upward momentum. He identified $66,000 as a critical support level for the restart of another short-term bullish cycle.

Whale Activity and BTC’s Price Dynamics

A closer look at BTC’s recent price movements reveals significant influence from large-volume traders, commonly called whales. Trading resource (Material Indicators) attributed the observed volatility to these traders manipulating liquidity near the monthly close.

This manipulation led to an unsuccessful attempt to set $69,000 as a new support level. Keith Alan, co-founder of Material Indicators, previously predicted that achieving this level of support would be an impressive end to May.

Material Indicators highlighted a specific incident in which a large Bitcoin order, called a “brick,” was placed in the market, causing the price to fall just above $69,000. This action resulted in a significant wick, making the support level at $67,000 vulnerable. Material Indicators reported that the market has not seen substantial new liquidity above the $65,000 level since then.

BTC’s Price and Mt. Gox’s Failed Exchange Estate

Meanwhile, Farside Investors data showed $1.96 billion in net inflows into US spot Bitcoin ETFs since May 15. According to the World Gold Council, the spot Bitcoin ETF market in the United States now exceeds $50 billion, while gold ETFs hold approximately $118.5 billion.

Inflows into spot Bitcoin ETFs typically result in BTC withdrawals from exchanges, which have dropped to 2.3 million BTC, their lowest level since March 2018, according to Glassnode. The transfer of these coins to cold storage and custodians outside of exchanges frequently reduces market liquidity.

This effect is particularly apparent in bull markets, as aggressive buying can increase price movements due to low order books at higher prices. If institutional investors continue to buy Bitcoin through ETFs while the price falls, selling pressure will most likely come from traditional spot markets.

Also, the movement of 141,686 BTC by the now-bankrupt Japanese platform Mt. Gox on May 28 precedes an impending asset distribution to creditors before the October 31 deadline. Mt. Gox owes over $9.4 billion in BTC to approximately 127,000 creditors, who have been awaiting payments since the exchange’s 2014 collapse.