The price of Bitcoin (BTC) has been trapped within a tight trading range for the past few days, and this trend continues on August 2nd. Bitcoin’s price experienced a slight decline of nearly 1%, falling to around $29,500. However, this downward movement is part of a broader market trend that has been in place for the past week, with the price fluctuating between the range of $28,850 and $29,660.
This sideways trend in Bitcoin’s price follows a 4% drop below $30,000 last week, which was primarily driven by the Federal Reserve’s decision to raise interest rates. Historically, rate hikes have had a negative impact on non-yielding assets like cryptocurrencies, including Bitcoin.
Despite these market factors, economists on Wall Street are anticipating a pause in the rate hikes during the next Federal Reserve meeting in September. This could help limit the downside for Bitcoin and prevent it from falling below the $29,000 mark. On the flip side, Bitcoin is struggling to break above the psychological resistance level of $30,000 due to broader market risks. This includes regulatory uncertainty surrounding Binance, the world’s largest crypto exchange by volume, as well as a recent DeFi exploit that resulted in a loss of $47 million.
The ongoing conflict in market sentiment towards Bitcoin has coincided with a decrease in institutional interest. According to CoinShares’ weekly report, investors withdrew approximately $19.4 million from Bitcoin-based investment funds in the week ending July 28th. The majority of these outflows, about 93%, came from long-Bitcoin investment products, while short-Bitcoin saw its 14th consecutive week of outflows totaling $3.1 million. Despite these outflows, the sentiment for Bitcoin as an asset remains supportive.
Looking ahead to August, from a technical standpoint, Bitcoin is currently trading above its 50-day exponential moving average (50-day EMA), which is a positive sign. The immediate resistance level for Bitcoin is $30,000, and if the price manages to break above this level, it is likely to rally towards $31,500, which is a local peak level for the month of August. This upward target remains valid as long as Bitcoin continues to trade above its multi-month ascending trendline support.
However, there is a risk of a significant downturn if Bitcoin breaks decisively below the 50-day EMA and the ascending trendline. This could result in a crash towards the 200-day EMA, which is currently around $27,000. It is worth noting that this level served as support during the March-April session earlier this year.
It is important to mention that this article does not provide investment advice or recommendations. Readers should always conduct their own research and analysis before making any investment or trading decisions. Every investment and trading move involves risks that should be carefully considered.