Bitcoin and major altcoins have been experiencing another tough week, while posting their first red candlestick in the monthly chart for 2023. Some positivity surrounding the debt-ceiling crisis resolution was not enough to reverse Bitcoin’s downside correction as the proposed deal will most likely wipe excess liquidity from the economy. Moreover, the AI mania has stolen the crown from cryptos as the most innovative trend in markets, which adds another headwind for the cryptocurrency space.

Cryptos no longer stocks on steroids?

During the pandemic era, but also in early 2023, cryptos and tech stocks surged in tandem, with digital assets outperforming by a solid margin. However, lately, this correlation seems to be weakening as investors start to price in some idiosyncratic risks and factors for each asset class. This is more than evident from the fact that Bitcoin had a negative monthly performance in May for the first time in 2023, while the Nasdaq gained around 8% during the same period on the back of the recent AI hype.

For the past couple of weeks, markets have been revolving around two major themes, the debt ceiling crisis and the Fed’s interest rate pathway, both of which should theoretically impact cryptos and stocks in the same way. Nevertheless, this theory got shuttered probably because the crypto space continues to grapple with regulatory woes and at the same time it remains under direct downside pressure from the greenback’s rebound.

The increasing odds of a deal regarding the debt-ceiling crisis also failed to boost cryptos, with investors expecting the market to flood with US Treasury Bills that will likely drain liquidity away from risky assets such as cryptos. Hence, the bulls have put their faith in the Fed’s June rate decision, where an additional rate hike could prove to be the nail in the coffin for the digital asset world.

Signs of market inefficiency undermine investor sentiment

Bitcoin and other digital tokens had been trading at a discount for some days during this week on Binance Australia, with the famous crypto exchange being suspended from a significant local currency withdrawal route. Binance Australia announced that as of June 1, customers would be unable to withdraw Australian dollars to their bank accounts using the popular PayID service, leading many clients to cash out their holdings with a material discount in order to withdraw AUD before the deadline.

Market participants are largely weighing the possibility of further losses in crypto space as it seems that the banking system is willing to cut ties with the crypto industry.

Double-bottom pattern fails to trigger reversal

Taking a technical look, we can see that BTCUSD attempted a rebound after its retreat from the recent 10-month peak encountered strong support twice at the $25,785 region. However, the recovery quickly faltered after the price tested the 50-day simple moving average (SMA).

If the price extends its short-term slide, it could initially face the double-bottom region of $25,785 before descending towards $25,250 resistance.

Alternatively, bullish forces could propel the king of cryptos towards the recent resistance of $28,460. If that barricade fails, the spotlight could turn to the $30,000 psychological mark.