The cryptocurrency market experienced a significant outflow of capital this Friday morning (May 30), with over $100 billion in liquidations, leading to a market cap drop to $3.33 trillion (-3%). Bitcoin (BTC) retreated to $105.9K (-2.7%) and saw a weekly loss of 4.3%, holding a 63.1% market dominance. Meanwhile, major altcoins were also in the red, although investor sentiment remained greedy (61%).
Key Points:
- China’s Alleged Cryptocurrency Custody Ban: The Chinese government has reportedly extended its ban on Bitcoin and cryptocurrency mining and trading to include custody services, which shocked the crypto market.
- Bitcoin’s Price Decline: Bitcoin has retreated to below $106K, triggering selling pressure as the Relative Strength Index (RSI) indicated oversold conditions.
- Increased Liquidations: Leveraged traders faced significant liquidations, with a 145% surge in liquidations, amounting to $712.1 million, as Bitcoin’s price fell below key support levels.
China’s Impact on Bitcoin and Crypto
While there was no official confirmation at the time of writing, reports emerged claiming that China had extended its cryptocurrency restrictions to include custody services, a move that could tighten government control over the financial system and the digital yuan. Historically, such announcements have led to strong market recoveries weeks later, but in the short term, it contributed to Bitcoin’s recent price decline.
In the Futures market, data from Coinglass showed a reduction in Open Interest to $151.8 billion (-5.9%) and a 21.7% increase in trading volume, with $644.2 million representing long positions that were liquidated by the bear market.
Liquidity and Investor Sentiment
Investor sentiment remained mixed, with the Volatility Index (VIX) for the S&P 500 showing a slight decrease (-0.47%) to 19.22 points. Meanwhile, U.S.-based Bitcoin ETFs experienced $358.65 million in outflows, signaling caution from institutional investors.
Despite the bear pressure, there were some altcoins that showed signs of growth. Tokens like LPT surged by +83.4%, and NMR saw an increase of +26.8%, standing out among the generally bearish altcoin market.
Conclusion
China’s move to reportedly extend its cryptocurrency ban has added significant pressure to the Bitcoin market, causing overselling and triggering liquidations in the process. However, history suggests that markets often recover strongly after such regulatory news. As the weekend approaches and traditional markets close, the short-term outlook for Bitcoin remains uncertain, with traders and analysts keeping a close eye on potential recovery or further declines.
Disclaimer: This article does not offer investment advice. All investments and trades involve risks, and readers are encouraged to conduct their own research before making decisions.
