Bitcoin Sees Strong Performance in May Amidst Tight Trading Range and Economic Uncertainty

Bitcoin Sees a Strong May Despite Recent Decline

Bitcoin had a robust performance in May, despite a recent drop. The price of bitcoin (BTC) has hovered around $68,000 since the U.S. Memorial Day holiday, but it dipped to near the week’s low during Friday morning trading.

At 11:45 am ET, bitcoin was trading at $67,300, down 1% over the past 24 hours and more than 2% from two hours earlier when it briefly surpassed $69,000. The broader CoinDesk 20 index also fell by 1.1% over the last day.

Despite the recent decline, May has been a strong month for bitcoin, which is up 11% from its starting point of approximately $60,000. However, this is less than the CoinDesk 20’s 20% gain, driven by a 31% rise in ether (ETH) due to improved prospects for a spot ETF for the asset.

Macro Conditions as Potential Catalyst

This week, bitcoin’s price has stayed in the $67,000-$69,000 range, mirroring struggles in other risk assets like U.S. stocks. While the Nasdaq remains near all-time highs, it has fallen about 2% this week, and the S&P 500 is down roughly 1.5%.

U.S. economic data indicated potential stagflation, with April’s Core PCE Price Index up 2.8% year-over-year, consistent with expectations and the previous month’s pace. The May Chicago PMI dropped to 35.4, below expectations of 41 and April’s 37.9. This weak reading has only been matched during the 2008/2009 financial crisis and the March/April 2020 COVID lockdowns. Following this news, the bond market rallied, and the 10-year U.S. Treasury yield decreased by 5.5 basis points to 4.50%.

As June starts, upcoming U.S. economic reports, including Monday’s national PMI and Friday’s employment report, will provide more clarity. If economic conditions soften, possibly leading to lower interest rates, bitcoin might attempt to surpass its all-time high of over $73,000 set in March. Conversely, strong economic data could lead to a retest of May’s lows.