Bitcoin 
$78,520, the largest cryptocurrency by market capitalization, began May trading at around $94,146. Within three weeks, it soared by 18.66%, reaching a new peak of approximately $111,970 on May 22. Despite a 3.9% pullback on May 23, buyers re-entered the market shortly thereafter, driving prices back up. Presently hovering around $108,789, Bitcoin remains just 2.8% below its all-time high. Market sentiment continues to exhibit cautious optimism, with analyst Lark Davis dismissing claims that the rally has peaked, asserting that traditional top signals are not yet present.
Strong Price Movements Mark Bitcoin’s May Journey
Bitcoin’s momentum in May was driven by continuous institutional demand evident since the beginning of the year. Factors such as Spot ETF flows, post-halving supply restrictions, and expectations of interest rate cuts in the U.S. have supported the sustainability of Bitcoin’s price above $100,000. Moreover, open positions in the futures market surpassing $15 billion since May 18 indicate that leveraged investors remain involved. Bitcoin’s market dominance over 60% has deferred aspirations for an “altcoin season.”
Despite this backdrop, technical indicators suggest short-term activity. The daily Relative Strength Index (RSI) stepped back from overbought territories, stabilizing around the 68 range. Meanwhile, 30-day volatility dipped below 3% for the first time since mid-March. While the price increase has slowed, a broad correction has not been confirmed. On-chain data indicates long-term holders are opting to retain rather than sell their assets during this rally, further tightening supply.
Lark Davis Suggests Market Still Far From Its Peak
In his latest analysis, Lark Davis examined the Net Realised Profit-Loss (NPL) metric. This measure reflects the market’s inclination to liquidate by evaluating the average realized profit of sold BTC. Historically, when the NPL value reaches a high positive range, profit-taking accelerates, raising the probability of corrections. However, current levels remain well below the peaks of the 2021 bull market cycle.
A similar insight can be drawn from the Net Unrealised Profit-Loss (NUPL) indicator. Although it climbed from 52.78% on May 5 to 58.7% on the peak day, the metric failed to reach the “Euphoria” zone of 75%. This implies that while many investors are in profit, a mass sell-off wave hasn’t been triggered. Davis suggests there’s still potential for an additional rally, as many players haven’t exited the market and further fuel is anticipated.
Nonetheless, uncertainties on the macroeconomic front cannot be ignored. Potential deferment of rate cuts by the Fed, adverse news from U.S. regulators, or a downward trend in U.S. stock markets could swiftly alter Bitcoin’s trajectory. Market participants are closely monitoring core data like NPL, NUPL, and volume increases to maintain their positions.
