Bitcoin (BTC) gained 8.4% between May 15 and May 16, peaking at $66,750, which was the highest level in three weeks. Even though Bitcoin stabilized near $65,000, this price change marks a turnaround after BTC retested the $57,000 support on May 1. However, these gains were not enough to instill bullishness according to Bitcoin derivatives metrics.
What’s behind Bitcoin’s lackluster performance?
Part of Bitcoin investors’ disappointment can be attributed to the strong performance of traditional assets. The S&P 500 index soared to an all-time high on May 16, with a total gain of 6% over 15 days. Meanwhile, gold gained 4% in the same period and is currently trading at $2,375, less than 1% away from its highest closing price ever.
Bitcoin needs to rally another 12% to reclaim its highest closing price of $73,084. This feat seems unlikely given that the primary driver of price, namely spot Bitcoin exchange-traded funds (ETFs) inflows, has faded. These ETFs captured $12.1 billion in investments since their launch in January but have stagnated for the past two months.
The worsening regulatory environment, especially in the U.S., might explain why investors are hesitant to buy Bitcoin using derivatives despite the recent price strength. On May 6, U.S. Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam warned that further enforcement actions would be taken against the crypto ecosystem over the next six months to two years.
Additionally, U.S. regulators have multiple pending cases against crypto firms, including Binance, Coinbase, and Kraken. Recent enforcement actions against privacy-focused services and broker-dealers like Robinhood have also contributed to the uncertainty. The lack of a clear legislative framework and jurisdictional clarity limits the appetite of Bitcoin investors.
Moreover, cryptocurrencies received negative media attention after the arrest of 193 suspects for money laundering using stablecoins in China. Authorities alleged on May 15 that these individuals transferred $1.9 billion using stablecoins to smuggle items and investments overseas. Additionally, on May 1, a couple of U.S….
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