A review of various market data suggests that the price of Bitcoin could fall below $29,000 in the short term due to regulatory concerns in the United States and macroeconomic problems in the world.
According to Cointelegraph, the price of Bitcoin reached above $31,800 on July 13 (July 22), but the existence of problems led to a 6.3% price correction and reached $29,700 on July 17 (July 26).
This price trend reflects investors’ concerns about ongoing regulatory developments in the United States and factors inhibiting economic growth, which could push the price of Bitcoin below $29,000. The level that was last reached on June 21 (June 31).
By examining the derivatives market, we see an increase in demand in Bitcoin futures, although this demand is decreasing in Asian markets.
The slight difference in the price of 3-month Bitcoin futures compared to the spot markets indicates the willingness of sellers to receive more money in exchange for a delay in clearing the account. In healthy markets, Bitcoin futures contracts are usually traded with an annual premium of 5-10%, a condition known as contango, which is not unique to cryptocurrency markets.
After crossing the 5% threshold, the collateral for Bitcoin futures was fluctuating at a limit of 7% between July 14 and 17 (July 23 and 26). This issue indicates the decrease of the buyers’ belief in the continuation of the upward trend after the unsuccessful attempt to cross the $31,800 level.
However, Tether collateral has decreased in the Asian market. This stablecoin’s collateral acts as an indicator of Chinese retail cryptocurrency demand and measures the difference between peer-to-peer transactions of Tether and the US dollar.
Recently, the Tether margin in Asia fell to 1.8%, which is the lowest level in more than 6 months. This downward trend started on July 12 (July 21) and increased over time, which indicates moderate selling pressure in the market.
Regulatory Concerns Plaguing Digital Currencies
Legislation in the digital currency sector is still a source of concern for investors. Although the court’s July 13 ruling that selling Ripple on or off exchanges did not violate securities market regulations had a positive impact on the market, Qasi did not definitively determine whether Ripple’s IPO could be classified as a securities sale.
This lack of transparency has worried some investors; Because it increases the possibility that other digital currencies are also potentially recognized as securities.
In addition to the court ruling against Ripple, Binance has also reportedly laid off 1,000 employees. Although the exchange has denied the reports, claiming routine resource allocations and ongoing hiring, concerns about Binance’s future have grown following the resignation of several top executives and a complaint from the Securities and Exchange Commission.
Macroeconomic trends to the detriment of the digital currency market
Recently, macroeconomic conditions have not been in favor of Bitcoin and other high-risk assets. China’s GDP growth decreased to 6.3% in the second quarter of 2023, which was lower than market expectations. Also, factors such as the continuation of the trade war with the United States and the efforts of the Chinese government to pay off its debts contributed to this decline.
Considering the macroeconomic effects and court decisions in the near future that can have a negative effect on the two major exchanges, we can expect that the probability of Bitcoin falling below $29,000 will increase. These conditions create a favorable scenario for sellers, which will strengthen the $30,000 resistance.
Bitcoin price likely to drop below $29,000 this week
Other than deteriorating macroeconomic conditions and the possibility of further interest rate hikes by the Federal Reserve this year, there seems to be no other specific event that will limit the likelihood of Bitcoin’s continued upward trend.
From a market perspective, Bitcoin futures represent an increase in confidence among professional traders who use leverage. However, the selling pressure created by retail investors in Asia could limit the overall growth of the digital currency market.