The Bitcoin price has taken a nosedive, crashing below the $29,000 mark. Shocking, isn’t it? Let’s delve into the factors causing this Bitcoin price rollercoaster.
Bitcoin (BTC), the digital gold, faced a brick wall at $31,800 on July 13, leading to a 6.3% drop to $29,700 by July 17. This downward spiral may mirror investors’ fears that regulatory changes and economic headwinds could push Bitcoin below the $29,000 threshold, a level last seen on June 21.
Bitcoin Futures Show Mixed Signals
On the derivatives front, Bitcoin futures are seeing a surge in demand, but the Asian markets are hitting the brakes. Bitcoin’s quarterly futures usually trade at a slight premium to spot markets, indicating sellers’ readiness to earn more by postponing settlement.
Between July 14 and July 17, BTC futures held a neutral-to-bullish 7% premium, exceeding the 5% benchmark. This hints at a moderate bullish sentiment following the failed attempt to breach $31,800. However, the Tether (USDT) premium in Asia is on a downward trend, suggesting a moderate selling pressure.
Regulatory Concerns Loom Over Crypto
Regulatory uncertainties continue to haunt the crypto world. The July 13 verdict that XRP’s sale via exchanges and OTC desks didn’t breach securities regulations gave markets a boost. However, the court didn’t conclusively determine whether XRP’s initial coin offering was a security offering, leaving investors on edge.
Adding fuel to the fire, Binance, the crypto behemoth, reportedly laid off 1,000 employees. Despite the exchange’s denial and claims of routine resource reallocation, concerns about Binance’s future have surfaced following the exit of several key executives and ongoing SEC action.
Macroeconomic Trends Spell Trouble for Crypto
The macroeconomic climate isn’t favoring Bitcoin and other risk-on assets. China’s GDP growth slowed to 6.3% in Q2, missing market forecasts. The ongoing US-China trade war and China’s debt management efforts are contributing to the slowdown.
Given these external factors and looming court decisions that could impact the two largest exchanges, the likelihood of the Bitcoin price falling below $29,000 has risen. This scenario favors bears, solidifying the $30,000 resistance.
Bitcoin Price Could Tumble Further
There seems to be no specific catalyst limiting Bitcoin’s upside potential, except for worsening macroeconomic conditions and potential interest rate hikes by the Federal Reserve in 2023.
From a trading perspective, BTC futures indicate higher confidence among professional traders using leverage. However, selling pressure from Asian retail investors is capping the overall crypto upside.
This article is for general information purposes only and should not be considered as legal or investment advice. The views expressed here are solely those of the author and do not necessarily represent the views or opinions of any organization.