The ongoing discussions around digital asset regulation are causing ripples in the bitcoin market as the cryptocurrency rally stalls just below the $110,000 mark. Over Memorial Day weekend, bitcoin experienced a slight rise before slipping back to $109,000 on Monday while the U.S. markets were closed.
The cryptocurrency remains up 1.7% in the past 24 hours, not far off from its all-time high set last week. In the broader digital assets space, the CoinDesk 20 index highlighted Uniswap (UNI) as a notable performer with a 6.6% gain. Chainlink (LINK) and Avalanche (AVAX) also saw increases of 3.3% and 3.4%, respectively.
The positive momentum appears tied to geopolitical news, with a temporary halt on proposed 50% tariffs on EU goods by the Trump administration. This delay eased tensions across global markets, including European stocks, which rebounded swiftly.
Digital Asset Regulation and Short-Term Holder Dynamics
Despite these developments, profit-taking by short-term holders could influence bitcoin’s short-term trajectory. In May alone, investors in this group realized cumulative profits of $11.4 billion, up significantly from the $1.2 billion observed the previous month. This shift raises concerns about whether current profit-taking might outpace new investment inflows.
According to Bitfinex analysts, the risk of a pullback persists unless fresh capital enters the market to counterbalance the existing supply. For bitcoin enthusiasts, the critical level to monitor is the short-term holder cost basis, which stands at approximately $95,000. Any move below this threshold might signal further declines.
Nonetheless, strong inflows into U.S. spot bitcoin ETFs, totaling $5.3 billion so far this month, alongside low market volatility, suggest a potential continuation of the uptrend as the second half of the year progresses.
Investors and analysts are closely watching to determine if the recent dip to $106,000 represents a bottom or if further corrections are underway. As always, new developments in digital asset regulation could significantly impact market trends.
For further insights, visit CoinDesk
At Bakara Invest, our analysis suggests that while current market conditions appear favorable, vigilance is essential as regulatory changes could alter the landscape significantly.
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