What’s next for Bitcoin after breaking below $ 30,000?
Bitcoin has stabilized at around $ 29,800 at press time, after falling below the all-important $ 30,000 level yesterday. The world’s largest cryptocurrency has been on a downward trend since it failed to hold its all-time high of $ 65,000 in April. Concerns about regulatory risks, less expansionary monetary policy and declining institutional demand have added to selling pressure in recent months.
Edward Moya, an analyst at the forex broker Oanda, described the Bitcoin trading environment as “a tug of war between bears and bulls”.
“Bitcoin’s long-term bullish outlook depends on some mainstream adoption in the US and Europe, and it looks risky to some.”
The European Union Commission is proposing changes to anti-money laundering rules that could include banning anonymous crypto asset wallets. That didn’t help market sentiment on Tuesday, Moya said.
Timothy Butler, partner at Troutman Pepper, takes a similar view:
“We see that the fall in Bitcoin prices and the resulting financial losses for many private investors will only lead to the regulatory authorities scrutinizing this market more closely, be it at the federal or state level.”
Regulatory uncertainty aside, retailers will also be wary of comments from Tesla CEO Elon Musk, who will speak at The B Word conference later today. Musk’s arrival comes particularly well at the right time, as Bitcoin could drop to $ 25,000, which could lose Tesla as much as $ 300 million, according to Shawn Tully, a senior editor at Fortune.
Potential short-term volatility increases as Bitcoin drops below $ 30,000, suggesting options traders are facing sharp price movements. However, the volume remains small and is in the price range of $ 20,000 to $ 30,000.
“Sustained pressure at this level could point to further downward moves,” said Nathan Cox, chief investment officer at Two Prime digital assets investment firm.
Bitcoin futures on the Chicago Mercantile Exchange (CME) have reached “backwardation” status, ie when the futures contract is trading below the spot price. This is the second time CME futures have traded in a put-off position in the past seven days, according to a report by Arcane Research on Tuesday.
“Institutional investors seem very cautious right now and generally seem to be in the process of eliminating risk.
The downward trend on the futures market shows that fear grows as long as traders are no longer willing to pay a premium for their money. “
Source: Arcane Research
Bitcoin 50% discount from ATH
Bitcoin is down about 50% from its April high of $ 65,000. Typically, recessions that exceed 50% can last for several months, similar to 2018 and the second half of 2019.
Katie Stockton, chief executive officer of Fairlead Strategies, says it would take two critical daily closings of less than $ 30,000 to confirm the collapse. Currently, the secondary support is at $ 27,000, which Bitcoin must hold to maintain its long-term uptrend.
Organizational needs decrease
As reported by Glassnode, the Purpose Exchange-Traded Fund, one of the first Bitcoin-Swap-Traded (ETP) products to be eligible, saw a decline in net inflows this week after experiencing a period of relatively strong demand in May and June of the downturn shows that institutional demand for these Bitcoin-regulated products remains relatively weak.
Of 42 crypto experts surveyed by Finder, 61% believe Bitcoin is currently undervalued, while experts expect the Bitcoin price to average $ 66,284 by the end of 2021.
“The introduction by companies and institutional investors in combination with a loose monetary policy and high asset inflation will push Bitcoin to a six-figure increase before the end of the year,” said Morpher CEO Martin Fröehler, the most optimistic of the panelists.
Meanwhile, John Hawkins, Senior Lecturer at the University of Canberra, one of the most pessimistic respondents believes the government’s introduction of Bitcoin will negatively impact cryptocurrency prices.
“I’m assuming El Salvador will introduce BTC as a kind of legal tender that will set a floor on it for a while. But after the price has fallen sharply, you can remove the legal tender status. “
According to Coindesk