This bearish technical pattern hints at a double-digit drop in Bitcoin price
A bearish technical formation has driven down the total crypto market capitalization over the past seven weeks. Bitcoin’s (BTC) 2% decline — and a 1.7% and 2.5% decline from BNB (BNB) and XRP (XRP), respectively — were the main drivers of the most recent 1.3% correction between May 18 and May 25.
The descending wedge formation initiated in April indicates a possible breakout near $1 trillion by late July. For bulls, the bearish structure that drove the total capitalization to $1.11 trillion on May 25 means that an eventual break to the upside would require extra effort.
Sticky inflation continues to worry investors, who price in higher odds of further interest rate increases by the United States Federal Reserve. The country’s latest personal consumption expenditure indicator displayed a 5% increase, which is noticeably higher than the 2% inflation target.
Moreover, data from Germany’s statistics office on May 25 showed a downward revision to the country’s gross domestic product from 0% to -0.3% for the first quarter of 2023 versus the previous quarter, marking the second consecutive decline. Furthermore, there’s the impending U.S. debt ceiling standoff and the fact that the U.S. Treasury is quickly running out of cash.
There are also a series of regulatory risks at the forefront due to various governments aiming to tighten their grip on crypto assets. The latest event involved an oversight body within the European Central Bank called the European Systemic Risk Board (ESRB), which recommended special attention to bank run risks on stablecoins. The ESRB mentioned the lack of transparency regarding stablecoins, providing the example of Tether (USDT).
Perpetual contracts, also known as inverse swaps, have an embedded rate that is
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