The crypto market has pulled back in the past few days. After soaring to a record high of $111,900 last week, Bitcoin price fell to $106,000 as investors booked profits. Bullish liquidations have risen, and demand for most altcoins has fallen. This article explains why the crash has happened and whether this is the end of the bull run.
Why the crypto market crash has happened
The crypto market crash has happened because of profit-taking among investors. Besides, Bitcoin price was up by 50% from its lowest level in April to its highest swing this month.
It is common for Bitcoin and other assets to pull back after rising to a crucial resistance level. There are many examples about this. For example, BTC price jumped to a record high of $64,750 in April 2021 and then dived to $28,685 in June 2021.
It then soared to a new all-time high of $69,255 in November 2021 and to below $20,000 in 2022. Most recently, Bitcoin peaked at $73,783 in March last year and then dropped below $50,000 in August.
These pullbacks normally happens as investors book profits and prepare for the next big move.
Technically, the crypto market crash is happening as Bitcoin forms the handle section of the cup-and-handle pattern. C&H is a pattern comprised of a rounded bottom, a horizontal support, and a shoulder. The shoulder can happen for a few days or months, and it often results into a strong bullish breakout.
Altcoins are falling because of their close correlation with Bitcoin. When Bitcoin sneezes, the rest of the crypto market catches a cold. In most cases, if Bitcoin falls by 1%, many altcoins will fall by over 5%.
Trade concerns and the Fed
The crypto market crash has also happened as concerns about trade and the Federal Reserve have remained. A US court ended Donald Trump’s tariffs this week, but another one left them in place for the time being. These tariffs will remain in place until the case concludes at the Supreme Court.
Also, it is worth noting that Trump has other ways to implement tariffs even if the current ones fail.
The crypto market crash happened after Scott Bessent said that China talks had stalled, and that it would now take a meeting between Xi Jinping and Donald Trump to resolve the deadlock.
There are also concerns that the Federal Reserve will maintain high interest rates for longer as inflation concerns remain.
Is the crypto bull run over?
Therefore, a common question among most participants in the crypto market is whether the bull market is now over.
We believe that the crypto bull run is still going on because of Bitcoin’s supply and demand dynamics. Bitcoin demand continues rising, with spot ETFs having cumulative inflows of over $45 billion.
At the same time, Bitcoin supply in exchanges has dropped from over 3 million in 2020 to 1.3 million today. The rest of the Bitcoins are held in cold wallets.
Also, as mentioned above, Bitcoin has formed a cup-and-handle pattern, meaning that it will soon have a bullish breakout. If this happens, there is a likelihood that other altcoins will rebound.
The caveat is that the ongoing price action could stay for a while as we enter the summer months. Historically, June is usually Bitcoin’s worst month. Therefore, the consolidation could remain for a while ahead of the eventual rebound.
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