The price of Bitcoin (BTC) reached a new yearly high of over $31,500 on July 6, building on the bullish momentum. However, concerns over potential interest rate hikes caused the price to contract briefly, dipping below $30,000. Additionally, investors became worried as Bitcoin miners started sending their BTC to exchanges, possibly indicating an impending sell-off.
The primary factor affecting Bitcoin price is the speculation surrounding the Federal Reserve’s decision on interest rates. Despite pausing interest rate increases in June, Fed chair Jerome Powell has shown commitment to reducing inflation by restarting rate hikes. The market widely believes that the Fed will begin increasing interest rates again, with a probability of 92.4% for rate hikes at the next Federal Open Markets Committee (FOMC) meeting on July 26. The correlation between crypto prices, such as Bitcoin, and traditional markets like the Dow and S&P 500 is still significant. Many major banks anticipate the possibility of a sharp recession in the United States in 2023, contributing to low investor sentiment.
US-led regulatory pressure against crypto exchanges is also impacting the market. While institutional interest in Bitcoin has been growing, uncertainty remains due to the actions of US regulators. On June 5 and June 6, the United States Securities and Exchange Commission (SEC) filed civil lawsuits against Binance and Coinbase, two major centralized exchanges. This has led to a significant drop in market share for Binance.US, from 22% to under 1%. Some market analysts speculate that these actions could be part of a renewed effort for the Operation Chokepoint 2.0 initiative, aiming to restrict access to all digital currencies. Coinbase, despite its pending lawsuit with the SEC, is still listed as the required surveillance partner for ETFs such as BlackRock and Valkyrie. Coinbase has filed a lawsuit against the SEC for clarity, and a response from the SEC is expected by July 13.
While there is excitement regarding the possibility of Bitcoin ETFs, not all analysts believe this structure is beneficial for Bitcoin price due to concerns about “paper BTC.” However, despite the short-term uncertainty, institutional investors maintain a positive long-term outlook for Bitcoin. This is evidenced by their push for Bitcoin financial instruments, potentially sparking a bull run. The price of Bitcoin will likely continue to be influenced by macroeconomic events, as well as further regulatory actions and interest rate hikes. Nonetheless, market participants still expect the price of Bitcoin to recover, especially as more financial institutions embrace BTC.
It is important to note that the views and opinions expressed in this article are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. As with any investment or trading decision, conducting one’s own research is crucial due to the inherent risks involved.
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