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Bitcoin (BTC) has rallied nearly 60% to around $27,000 in 2023 amid anticipations that the Federal Reserve would pause its quantitative tightening amid the U.S. banking crisis. Still, BTC price has failed to move beyond $30,000 decisively.

Buying exhaustion at this key psychological level led to a price correction toward $25,000 over the past week. Interestingly, the decline has strengthened Bitcoin's correlation with several traditional financial metrics.

But does this raise the risk of Bitcoin continuing its downtrend in Q2? Let's have a closer look.

U.S. dollar index's double bottom

The U.S. dollar index (DXY), which measures the greenback's strength against a basket of top foreign currencies, rose 1.4% to 102.70 in the week ending May 14. The rise marked the dollar's best week since September 2022.

Interestingly, the dollar's rise left behind a potential double bottom pattern, confirmed by two low points near a similar horizontal price level of around 100.75. A double bottom pattern is a bullish reversal setup, suggesting DXY could rise toward 105.85 in the next few months.

Bitcoin (BTC) sought to pass $27,000 on May 13 after a “scam wick” produced new two-month lows.

Traders: BTC price must retain $26,500

Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as it recovered from a flash dip to $25,800 on Bitstamp.

The pair saw weakness after the start of the week’s final Wall Street trading session, briefly cutting through the key 100-day and 200-week moving averages (MAs) before rebounding.

As the weekend began, market participants were split over the likely course of events to come.

“Nice daily close. Has to hold 26.5K going forward. That’s the line in the sand for me,” Daan Crypto Trades told Twitter followers.

The market valuation of Pepecoin (PEPE) has dropped by 65% as of May 12, a week after its record high of $1.54 billion.

Profit-taking appears to be the primary reason behind the extreme price correction, after it rallied from almost nothing to as high as $0.00000372 after its launch on April 14, while emerging as the fastest-growing ERC-20 token in the crypto market's history.

What is PEPE?

Pepecoin captures people's attention by mimicking features of memecoins, based on popular internet memes. The most well-known is Dogecoin (DOGE), which uses the famous Shiba Inu dog meme as its logo. 

Pepecoin is based on the "Pepe The Frog" meme, created by Matt Furie in his 2005 cartoon “Boys Club.” The humanoid frog went on to become a mainstream meme in the mid-2010s, with singers Katy Perry and Nicki Minaj using it in their tweets.

In 2021, BarnBridge founder Tyler Ward launched a low-resolution Pepecoin NFT collection that reaped over $60 million in sales on the OpenSea auction platform.

Bitcoin’s price (BTC) broke below its 55-day support at $27,000 on May 12. In result, the two-day, 7% correction to $26,155 caused $100 million worth of long BTC futures contracts to be liquidated.

However, Bitcoin margin and futures markets displayed strength during the down-move, fueling hope of a recovery toward $28,000.

Regulatory pressure, stronger U.S. dollar bite

Regulatory uncertainty in the United States significantly increased after Bitcoin miner Marathon Digital received yet another subpoena. The publicly traded mining company informed investors on May 10 that it received a subpoena from the U.S. Securities and Exchange Commission (SEC) concerning whether it may have violated federal securities laws, among other things, by using related-party transactions.

Furthermore, there’s the additional risk of the 627,522 Bitcoins held by the Grayscale GBTC Trust Fund, which has been trading at a steep discount for over a year while Grayscale’s holding company, Digital Currency Group (DCG), struggles with some failing subsidiaries. DCG’s crypto lending and trading firm, Genesis Capital, filed for Chapter 11 bankruptcy protection in January.

Despite having separate corporate structures, Genesis Capital had "intercompany obligations" with the holding company DCG, so the consequences for the administration of the Grayscale funds are unknown. Additionally, the group reportedly owes Gemini's clients about $900 million, and the U.S. SEC charged Genesis and Gemini in January.

Bitcoin (BTC) is entering prime “buy the dip” territory as the clock ticks down to the 2024 block subsidy halving.

That is the conclusion of several well-known market participants this month, with Bitcoin just one year away from its “very interesting” next halving.

Bitcoin vs. the halving: Time to buy?

Bitcoin halving cycles are known to follow patterns when it comes to price activity in a given period.

These four-year “epochs” have so far contained a macro high and macro low for BTC price, with those events likewise four years apart from one another.

What’s more, in each cycle, the macro low has tended to occur a little over one year before the next halving. For longtime Bitcoin figures, including crypto media guru Pete Rizzo, there is thus little reason to believe that the future will be substantially different.

Bitcoin (BTC) neared two-month lows on May 12 amid fears that a “head-and-shoulders” pattern would put bears ahead.

Analysis of BTC price: “Welcome to bearadise”

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD reaching $26,100 on Bitstamp — its lowest since March 17.

Despite encouraging macroeconomic conditions for risk assets, Bitcoin failed to capitalize on the potential for gains as bid liquidity headed lower.

“Welcome to bearadise,” on-chain monitoring resource Material Indicators summarized.

A chart uploaded to Twitter the day before showed principal buy support now around $25,750, with BTC/USD eating liquidity higher overnight.

Bitcoin (BTC) headed toward $27,000 after the May 11 Wall Street open as bulls failed to show strength.

BTC price “rolls over” after brief recovery

Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as it risked a further loss of support.

After a modest recovery from local lows seen the day prior, the pair remained weak, even as new United States macro data offered bullish cues.

“Dump was retraced but then price quickly rolled over again,” popular trader Daan Crypto Trades summarized.

“We’re still trading at the range lows and until broken I think shorts aren’t great R:R. Bulls need to show strength by retaking the daily open for me to consider a possible reversal scenario.”

The $900 million Bitcoin (BTC) weekly options expiry on May 12 might play a decisive role in determining whether the price will succumb below $27,000.

Bitcoin price rejected again at $30,000

BTC bears will try to take advantage of macroeconomic headwinds, Silk Road coins' FUD, and uncertainty caused by Bitcoin’s transaction fee spike to pull Bitcoin's price down in the next few days.

The BTC/USD pair  broke above $29,800 on May 6, but the tide quickly changed as the resistance proved stronger than anticipated.

The subsequent 8.2% two-day correction tested  $27,400 support, favoring the thesis of sideways trading as investors evaluate the economic crisis dynamic and its potential impact on cryptocurrencies.

Meanwhile, Berkshire Hathaway owner and billionaire investor Warren Buffett is no longer optimistic about the U.S. economy’s growth. Such a pessimistic scenario for the global economy might explain why some Bitcoin traders decided to reduce exposure over the past week, greatly reducing the odds of breaking $30,000.

Bitcoin (BTC) struggled to recover from fresh losses on May 11 as a false alarm over United States government sales spooked markets.

Analysts deny U.S. government BTC sales

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD circling $27,400 at the time of writing.

The pair had seen a flash sell-off the day prior, briefly taking it to $26,850 after claims that confiscated BTC held by the U.S. government was being sold off.

This was subsequently disproved, but for already sensitive crypto markets, the damage was done.

Among traders, Jackis described the local lows as a “scam” move, while forecasting lower levels to come.

After a brief overshoot above $2,000 on May 6, the Ether price has returned to a tight range between $1,820 and $1,950, which has been the norm for the past three weeks.

According to the latest Ether (ETH) futures and options data, odds favor the Ether price breaking below the $1,820 support, as professional traders have been unwilling to add neutral-to-bullish positions using derivatives contracts.

Not even the memecoin frenzy that boosted Ethereum network demand was able to instill confidence in investors. The average Ethereum transaction fee skyrocketed to $27.70 on May 6, the highest in 12 months, according to BitInfoCharts data. As reported by Cointelegraph, one of the main drivers behind the increase was the insatiable demand for Pepe (PEPE), among other memecoins.

Moreover, the increased gas fees have driven users to layer-2 solutions, which could be interpreted as a weakness. For instance, it causes a decline in the total value locked by removing deposits from the Ethereum chain, especially in decentralized finance applications.

Some analysts believe the $30 million Ether sale by the Ethereum Foundation contributed to ETH being unable to break above $2,000, as nearly 20,000 ETH were sent to the Kraken cryptocurrency exchange. The foundation’s last relevant transfer occurred in November 2021, when the price topped around $4,850 and subsequently declined by 80%.

Bitcoin (BTC) ticked higher around the May 10 Wall Street open as United States inflation data beat expectations.

Markets eye June Fed rate hike pause

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD responding instantly to the April Consumer Price Index (CPI) print, up 1.7% on the day.

The pair saw local highs of $28,328 on Bitstamp before consolidating immediately above the $28,000 mark.

The CPI had come in at 4.9% year-on-year, a shade below the expected 5.0%. This gave a clear signal that U.S. inflation was continuing to decrease, once more in line with predictions from both the Federal Reserve and external sources.

“Fed’s data dependency kicking off well, strong jobs data and now inflation as expected... pause in June at this stage,” financial commentator Tedtalksmacro wrote in part of a Twitter response.

Bitcoin (BTC) tracked $27,500 on May 10 as markets geared up for what should be a positive United States inflation print.

CPI set for months of decline

Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as it lingered in a narrow trading range ahead of the April Consumer Price Index (CPI) release.

A classic volatility catalyst for risk assets, CPI forms one of the key metrics the Federal Reserve considers when changing interest rates.

The next change is a full month away, but government and private-sector metrics predict declining inflation to persist and even accelerate in the coming months.

“A little bit of stagnation now, but into the coming two to three months, we’re likely to see a gradual decline, and actually a pretty steep decline, in inflation,” financial commentator Tedtalksmacro said in part of YouTube analysis on May 9.

Bitcoin (BTC) treaded water below $28,000 on May 9 as markets prepared for macroeconomic data releases.

Bitcoin stays muted on eve of CPI

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD acting near $27,700 at the day’s Wall Street open.

The pair had seen deeper losses the day prior, with a tap of $27,300 so far marking the local bottom.

Traders hoped that May 10 would provide some much-needed volatility in the form of the United States Consumer Price Index (CPI) print for April.

“Bitcoin still trending downwards, as $27,800 now becomes resistance. I’m expecting a sweep lower again, and then we’re ready to long your longs in anticipation of CPI,” Michaël van de Poppe, founder and CEO of trading firm Eight, told Twitter followers in an update.

Warren Buffett moving into cash suggests that he's bracing for a possible collapse in risk-on asset prices. With Bitcoin (BTC) up 70% year-to-date and correlated with equities, should BTC investors also prepare for a potential stock market crash? 

Buffett says "incredible period" is over

Warren Buffett's Berkshire Hathaway dumped $13.30 billion worth of equities and increased exposure in cash and U.S. Treasuries in Q1, its latest quarterly earnings report shows. Meanwhile, it channeled $4.4 billion toward purchasing its own stock and $2.9 billion on the shares of other publicly-traded companies.

The market considers Berkshire Hathaway's performance as a key indicator to gauge the U.S. economy's health, given the firm's holdings range from American railroad to electric utilities and retail businesses.

But the 92-year old investor, who has credited the U.S. economy's growth for the success of Berkshire Hathaway in the past, is no longer optimistic.

“The majority of our businesses will report lower earnings this year than last year,” Buffett said last weekend at an event. The “incredible period” for the US economy has been coming to an end over the past six months, he added.

For the past 17 days, Bitcoin (BTC) price has been trading within a narrow 8.5% range from $27,250 to $29,550, causing the 40-day volatility metric to drop below 40%. This wasn't restricted to cryptocurrencies as the S&P500 index's historical volatility has reached 17%, its lowest level since December 2021.

But will $28,000 become the new resistance? Not according to the latest Bitcoin futures and options data. Nevertheless, macroeconomic conditions remain the main driver for risk markets’ price fluctuations in the near to medium terms.

BTC price flattens as investors lose risk appetite

A myriad of reasons could be given to explain the relatively low price oscillations in risk markets, including the expectation of a recession, investors unwilling to place new bets until the U.S. Federal Reserve ends its rate hikes, or increased demand (and focus) on fixed income trades.

The problem is that no one can prove what has been causing investors to restrict their risk appetite and drive Bitcoin’s price sideways. Many fear that commercial real estate is a growing concern, which could trigger major turbulence ahead—including Warren Buffett, the multi-billionaire fund manager.

While some believe that the U.S. debt ceiling discussion and the banking crisis could further cement the U.S. dollar’s weakening, Buffett does not foresee alternatives. The finance mogul is a long-term critic of the precious metal gold, as his investment thesis prioritizes yield-providing assets.