Bitcoin price is expected to fall below $29,000 in the near future, according to multiple data points and indicators. The recent struggles in Bitcoin’s price can be attributed to various factors, including regulatory developments and macroeconomic headwinds.
On July 13, Bitcoin faced difficulties in breaking above $31,800, resulting in a 6.3% correction down to $29,700 on July 17. This price action reflects investors’ concerns that ongoing regulatory developments and macroeconomic factors could drive Bitcoin below the $29,000 level, which was last observed on June 21.
In the derivatives market, Bitcoin futures have shown increased demand. However, Asian markets, particularly China, have been slowing down in terms of their interest in Bitcoin. Bitcoin quarterly futures typically trade at a slight premium compared to spot markets, indicating sellers’ willingness to delay settlement in exchange for receiving more money. Healthy markets usually exhibit BTC futures contracts trading at a 5% to 10% annualized premium, a situation known as contango.
Between July 14 and July 17, BTC futures maintained a neutral-to-bullish 7% premium, surpassing the 5% threshold. This suggests that there is moderate conviction among bulls following the unsuccessful attempt to break above $31,800. However, the Tether (USDT) premium in Asia has been declining. The Tether premium serves as an indicator of demand from China-based retail crypto traders. The recent discount of 1.8% marks its lowest point in over six months, indicating moderate sell pressure.
Regulatory concerns continue to weigh on the crypto sector. The recent ruling by the Securities and Exchange Commission (SEC) that the sale of XRP did not violate securities regulations did not definitively determine whether XRP’s initial coin offering (ICO) was classified as a security offering. This lack of clarity has left some investors uneasy, as it raises the possibility of other cryptocurrencies also facing potential securities designations. Additionally, the layoff of 1,000 employees at Binance and ongoing court actions from regulators have raised concerns about the future of the exchange.
In terms of macroeconomic trends, the environment has not been favorable for cryptocurrencies and risk-on assets. China’s GDP growth slowed to 6.3% in the second quarter, falling short of market expectations. Factors such as the ongoing trade war with the United States and the government’s efforts to address debt have contributed to the slowdown. These external factors, combined with pending court decisions that could negatively impact major exchanges, have increased the likelihood of Bitcoin breaking below $29,000.
From a trading perspective, BTC futures show higher confidence among professional traders using leverage. However, the sell pressure from retail investors in Asia has limited the overall upside for cryptocurrencies. Considering these external factors and pending court decisions, the odds of Bitcoin falling below $29,000 have increased, creating a favorable scenario for bears and strengthening the $30,000 resistance level.
It is important to note that this article is for general information purposes only and should not be taken as legal or investment advice. The views expressed in this article are the author’s alone and do not necessarily reflect the views and opinions of Cointelegraph.
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