Down 17%, what went so wrong for the Bitcoin price in May?

Cryptos were hit both by interest rate hikes from leading central banks and the collapse of the Terra stablecoin.

| More on:
A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Bitcoin price declined 17% in May
  • Cryptos sold off alongside risk assets amid interest rate hikes
  • The Terra stablecoin collapse roiled crypto investor confidence

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.

In a sign of the ongoing volatility that comes with crypto investing, the Bitcoin price hit a high of US$39,903 in May and plumbed lows of US$26,350, according to data from CoinMarketCap.

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.

But with the Bitcoin price already under pressure, the closely-followed billionaire investors surely didn't spark a bull run with their comments at their annual shareholder meeting early in May.

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 stablecoinTerraUSD (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.

Should you invest $1,000 in Electro Optic Systems Holdings Limited right now?

Before you buy Electro Optic Systems Holdings Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Electro Optic Systems Holdings Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin. The Motley Fool Australia has positions in and has recommended Bitcoin. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Cryptocurrencies

Bitcoin coins in a pile.
Cryptocurrencies

What's happening with the Bitcoin price amid the Trump tariff market panic?

You may have heard Bitcoin referred to as ‘digital gold’. But is it really a haven asset?

Read more »

A graphic picture of gold Bitcoins with the Bitcoin symbol lying on a desk with arrows shooting higher and one arrow lifting off the flat surface pointing to the sky.
ETFs

Dip your toes into cryptocurrency with these 2 ASX ETFs

Interested in cryptocurrency?

Read more »

Bitcoin symbol with a rising green arrow.
Cryptocurrencies

Bitcoin surges: How to invest through the ASX

Wanting to gain exposure to the cryptocurrency? Check out these two options.

Read more »

Bitcoin coins in a pile.
Cryptocurrencies

Here's what owning Bitcoin for 7 years has taught me

Bitcoin has been a fantastic investment for me, but not without its pitfalls.

Read more »

A woman holds a bitcoin token in her hand as she smiles at the camera in the background.
Cryptocurrencies

Bitcoin price surges on Donald Trump's cryptocurrency strategic reserve update

The Bitcoin price hit all-time highs of US$109,115 on the day Trump was sworn into office.

Read more »

Bitcoin coin with a rising arrow.
Cryptocurrencies

The Bitcoin price soared 120% in 2024. Could it repeat that performance in 2025?

Bitcoin soared by 150% in 2023 and 120% in 2024, so many crypto investors are expecting it to once again…

Read more »

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Cryptocurrencies

Why Bitcoin, Ethereum, and Dogecoin just surged

Today's CPI report turns out to mean a great deal to crypto investors.

Read more »

Bitcoin coin with a rising arrow.
Cryptocurrencies

Bitcoin price smashes new record highs as market value tops US$2.1 trillion

Bitcoin just soared to new all-time highs. But why?

Read more »