A number of data indicate that the price of Bitcoin will fall below $29,000 in the short term.
Yes, you read that right.
Let’s investigate the main issues driving the current Bitcoin price drop.
Bitcoin (BTC) struggled to break above $31,800 on July 13, resulting in a 6.3% pullback to $29,700 on July 17. The price action may reflect investor concerns that ongoing regulatory developments and macroeconomic headwinds could push bitcoin below the $29,000 level, which was last observed on June 21.
In derivatives, bitcoin futures show increased demand, but Asian markets are slowing.
Quarterly bitcoin futures typically trade at a slight premium compared to the spot market, reflecting sellers’ willingness to delay settlement to secure more capital. Healthy markets typically trade BTC futures contracts at an annualized premium of 5% to 10%, a condition known as contango, and it’s not unique to the cryptocurrency market.
Between July 14 and July 17, BTC futures held a neutral to bullish 7% premium, above the 5% threshold. This shows that bulls are confident after a failed attempt to break above $31,800.
However, Tether’s (USDT) premium has been falling in Asia. The stablecoin premium is an indicator of retail cryptocurrency trader demand in China, measuring the difference between peer-to-peer transactions and the U.S. dollar.
Tether premiums in Asia recently traded at a 1.8 percent discount, the lowest in six months. This inverse premium trend started on July 12 and has continued to expand, indicating moderate selling pressure.
Regulatory concerns continue to plague cryptocurrencies
Regulation of the cryptocurrency industry also remains a focus for investors. While the July 13 ruling that the sale of Ripple (XRP) on exchanges and over-the-counter platforms did not violate securities regulations did bolster markets, the court ruling did not definitively determine whether XRP’s ICOs were classified as Securities issuance. This lack of clarity has unnerved some investors as it raises the possibility that other cryptocurrencies also face potential securities designations.
In addition to the court ruling on XRP, Binance also announced layoffs of 1,000 employees. While the exchange has refuted the reports and claimed it is undergoing a regular reallocation of resources and continued hiring, there are concerns about Binance’s future with the departure of several key executives and ongoing court proceedings with the SEC .
related: SEC v. Ripple mentions judge who ordered release of ‘Hinman papers’
Macroeconomic trends are not favorable for cryptocurrencies
The macroeconomic environment is not favorable for Bitcoin and risk assets. China’s GDP growth slowed to 6.3% in the second quarter, lower than market expectations. Factors such as the continuation of the Sino-US trade war and the government’s resolution of the debt problem have led to a slowdown in economic growth.
The chances of Bitcoin falling below $29,000 have increased given external factors and pending court decisions that could negatively impact the two largest exchanges. This created a favorable situation for the bears, leading to a strengthening of the $30,000 resistance.
Bitcoin price could fall below $29,000 this week
Aside from deteriorating macroeconomic conditions and signs of further rate hikes by the Federal Reserve in 2023, there doesn’t appear to be any concrete catalyst limiting Bitcoin’s upside potential.
From a trading perspective, professional traders using leverage show higher confidence in Bitcoin futures. However, selling pressure from retail investors in Asia limited the cryptocurrency’s overall upside.
This article is for general informational purposes only and is not intended and should not be construed as legal or investment advice. The views, ideas and opinions expressed here are solely those of the authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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