The Bitcoin (CRYPTO: BTC) price finished the final day of May on a positive note, up 4% from the previous day to US$31,685 (AU$43,865).
But that last minute rally wasn’t enough to stem some hefty losses incurred earlier in the month, leaving the Bitcoin price down 17% since 1 May. The world’s top token by market cap is now down 36% year-to-date.
So why did it end the month down 17%?
US Fed sent Bitcoin price spiralling lower
Much of the pressure facing Bitcoin and most every crypto has come from rising inflation and the resulting interest rate hikes.
This has seen risk assets, like cryptos and high growth tech shares, come under heavy selling pressure.
On 6 May, the Bitcoin price tumbled 11%. This followed on the US Fed’s 0.50% interest rate increase in the world’s biggest economy, which also saw the tech-heavy Nasdaq lose 5% in a single day.
Commenting on that selloff at the time, Valkyrie Investments head of research Josh Olszewicz said:
Bitcoin has become increasingly correlated with US trading hours and US traditional market indices, likely due to a combination of increasing US institutional presence as well as the absence of China after the sweeping bans last year.
Warren Buffett and Charlie Munger sure didn’t help
The Oracle of Omaha, Warren Buffett, and his long-time partner at Berkshire Hathaway, Charlie Munger, are well known for their general disdain of cryptos.
Munger led the charge saying:
When you have your own retirement account and your friendly adviser suggests you put all your money into Bitcoin, just say no… In my life, I try and avoid things that are stupid and evil and make me look bad in comparison with somebody else. Bitcoin does all three.
Bitcoin price fell sharply amid Terra stablecoin collapse
Another blow to the Bitcoin price in May was the collapse of Terra.
On 12 May, Australians woke to the news that a top-ranked stablecoin – TerraUSD (CRYPTO: UST) – had lost its peg to the US dollar. Over the following days, UST would drop to as low as 10 US cents.
The token meant to help UST maintain that US$1 peg – Terra (CRYPTO: LUNA) – fell even harder, losing more than 99% of its value.
The collapse sent almost every top crypto into the red. The Bitcoin price dropped 5% to US$29,830.
And with fewer tailwinds than headwinds in May, it finished the month well into the red.