The recent market-wide price drop is considered a "healthy correction" by analysts and is not a major crash.
The low trading volumes in new Bitcoin ETFs from Hong Kong may have played a part in the ongoing decline.
Analyst, WhaleWire suggests that false liquidity from stablecoin giant, Tether might have inflated the Hong Kong market.
This is the fourth 20% correction for Bitcoin this year and is considered normal by Real Vision CEO, Raoul Pal.
The crypto market has been through some pretty rough weather between Tuesday and Wednesday this week.
Recently, the market crashed, with Bitcoin plunging straight down from above $61,000 to around $56,000.
Ethereum followed suit, with a decline to $2,800, considering the underwhelming performance of the new Bitcoin ETFs in Hong Kong.
This week was set to be a massively bullish one for Bitcoin, considering the late April launch of six Bitcoin ETFs in Hong Kong, similar to the 11 launched in the US four months ago.
However, instead of the projected $125 million in trading volume on the first day of trading, these six ETFs only amassed around $11 million, much to the disappointment of analysts, issuers, and investors.
According to recent insights posted on X from WhaleWire, this underwhelming performance of the ETFs shows a strong lack of institutional demand in the Hong Kong ETFs.
The underwhelming performance of Hong Kong ETFs
WhaleWire opines that this performance of the ETFs may have been due to artificial inflation by Tether (issuers of USDT) “injecting record amounts of fake money into the markets”.
It is also important to mention that in a recent report from Nicholas Sciberras, an analyst from Collective Shift, highlighted the rise of Defi and its promise of growth.
Sciberras recognized the massive strength the Defi market is showing but also mentioned the possibility of equally massive losses in the future.
Sciberras noted the challenges with Bitcoin's future security as shown by the selling pressure that comes after each halving.
Moreover, the report also mentions the decrease in block rewards, as well as how “inscriptions” from runes and ordinals continue to “spam” the blockchain.
Moreover, there is also the issue of the recent decline in the US economy, as shown by the S&P Global Composite PMI dropping to 50.9 in April.
Sciberras says that Bitcoin has a bullish future, depending on the strength of traditional banking frameworks. However, on the other hand, he also notes that “if Bitcoin threatens countries’ monopoly on money due to widespread adoption, governments could move to restrict it.”
Despite the general market downturn between 30 April and 1 May, analysts have weighed in and stated that things aren't as serious as they look.
Moreover, the market is in the middle of a "healthy correction", they say.
For example, Raoul Pal, CEO of Real Vision in a recent tweet, noted that this is the fourth 20% correction on Bitcoin within this year, which is not very uncommon.
Fourth correction in 12 months
Rekt Capital also weighed in on the conversation in another tweet, reiterating that the current market correction is a healthy one.
“As painful as it may be to see Bitcoin's price retrace and/or move sideways...
This is exactly what the cycle needs to resynchronise with historical price norms and the traditional Halving Cycle.
The longer this goes on, the better”
At the time of writing, Bitcoin trades at around $57,200 and is nursing a 7% decline over the last 24 hours as shown by data from CoinMarketCap and TradingView.
Bitcoin’s current price
As shown above, most technical indicators on the cryptocurrency show sell conditions, indicating that while a Bitcoin recovery can come at any time from now, it might help to sit back and observe for now.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.