As the excitement surrounding Bitcoin among investors wanes, regulatory and macroeconomic obstacles reappear and have a detrimental effect on the price of BTC.
Numerous indicators indicate to a short-term decline in the price of Bitcoin below $29,000.
You did read that correctly.
Let’s look into the key factors that are behind the present decline in the price of bitcoin.
On July 13, Bitcoin BTC tickers down $30,205 had trouble breaking over $31,800, which led to a 6.3% drop down to $29,700 on July 17. The price movement may be a reflection of investors’ worries that continuous macroeconomic and regulatory uncertainties could push Bitcoin prices below the $29,000 mark, which was last seen on June 21.
However, Asian markets are slowing down. On the derivatives side, Bitcoin futures indicate growing interest.
Since sellers are prepared to accept more money in return for postponing settlement, Bitcoin quarterly futures often trade at a little premium to spot markets. A scenario known as contango, which is not specific to cryptocurrency markets, is typically seen in healthy markets with BTC futures contracts trading at a 5% to 10% yearly premium.
Between July 14 and July 17, BTC futures kept a 7% premium that was neutral to positive, above the 5% level. Following the failed effort to break over $31,800, this shows that bulls have a modest level of conviction.
The $1.00 Tether USDT premium, however, has been losing ground in Asia.
By comparing peer-to-peer transactions to U.S. dollar prices, the stablecoin premium provides as a gauge of demand from China-based retail cryptocurrency traders.
Its lowest level in more than six months, the Tether premium in Asia recently fell to a discount of 1.8%. Since it began to broaden on July 12, the inverse premium trend has been pointing for a light amount of sell pressure.
Regulator concerns still affect the cryptocurrency market
Investors are still thinking about regulating the cryptocurrency industry. Markets were boosted by the court’s decision on July 13 that the sale of XRP XRP tickers down $0.74 through exchanges and over-the-counter desks did not violate securities laws, but the decision left it unclear whether XRP’s initial coin offering qualified as a security offering.
Some investors are concerned about this ambiguity because it raises the prospect that other cryptocurrencies may potentially be designated as securities.
Along with the court’s decision on XRP, Binance also disclosed the layoff of 1,000 staff members. The departure of numerous senior executives and the ongoing legal action from the Securities and Exchange Commission have raised questions about Binance’s viability, despite the exchange’s denial of the stories and claims of ordinary resource reallocation and continuous recruiting.
Macroeconomic trends do not favor cryptocurrencies
Risk-on assets like Bitcoin have not fared well in the macroeconomic context. The ongoing trade spat with the United States and the government’s attempts to reduce debt were among the factors that caused China’s gross domestic product growth to drop to 6.3% in the second quarter, below market forecasts.
The probability of Bitcoin dropping below $29,000 has grown in light of outside variables and potential legal rulings that may have a detrimental effect on the two main exchanges. The $30,000 resistance grows stronger as a result of this favorable environment for bears.
This week, the price of bitcoin could drop under $29,000
With the exception of worsening macroeconomic conditions and signs that the Federal Reserve will boost interest rates again in 2023, there does not seem to be a single factor limiting Bitcoin’s upside potential.
In terms of trading, leveraged professional traders have a higher level of confidence in BTC futures. Nevertheless, the total potential for cryptocurrencies is constrained by the sell pressure from Asian individual investors.
