Bitcoin’s Price Declines as Bullish Momentum Fades Amidst Regulatory Delays and Investor Uncertainty
Summary:
The decline in Bitcoin's price continues this week as bullish momentum fades. Analysts compare the current market to the pre-bull cycle of 2015-2017. Factors impacting Bitcoin's price include a stall in investor sentiment, low trading volume, and regulatory delays on Bitcoin ETF approvals. Despite short-term uncertainty, institutional investors remain positive, and Bitcoin's long-term recovery is expected. Macro events and regulatory actions still affect Bitcoin's price, and upcoming speeches by the Federal Reserve Chairman may provide insight into future interest rate policies.
Bitcoin's bullish momentum has significantly diminished this week, with a 9.1% decline in the past seven days, erasing its year-to-date gain of 57.8%. The cryptocurrency's price is currently below the critical level of $27,750, which is necessary to regain any bullish momentum. This contraction has led some analysts to draw parallels between the current BTC market and the pre-bull market cycle of 2015-2017.
The decline in Bitcoin's price can be attributed to a stall in investor sentiment, as short positions have dominated liquidations in the futures market since the beginning of the year. On August 17, over $213.5 million worth of long positions were liquidated, marking the largest single day of liquidations since the Terra Luna collapse in May 2022.
The lack of buying pressure from trading volume has further affected Bitcoin's price, as both its volume and Ordinals volume have reached the lowest levels since early 2021, with a decrease of over 98%. Consequently, the Fear and Greed Index, an important measure of investor sentiment, has transitioned from neutral to a downtrend reflecting fear in the last 30 days.
Despite the short-term uncertainty, institutional investors maintain a positive long-term outlook on Bitcoin. Despite a challenging regulatory environment in the U.S., major financial institutions are pushing for the approval of Bitcoin financial instruments, potentially sparking a bull run. Grayscale has directly urged the SEC to approve all Bitcoin ETFs. However, the SEC's continued delay in approving these ETFs until 2024 may negatively impact investor sentiment and overall market activity.
Bitcoin's market structure has turned bearish due to its recent price action, despite a surge in open interest. Analysts speculate that a sharp correction back to $29,000 is possible. Although some have theorized that BlackRock may be suppressing Bitcoin's price ahead of their own ETF launch, this argument seems more like a conspiracy, as a price crash in BTC would also be detrimental to them. Despite the current downturn, Pantera Capital believes BTC could reach $148,000 by July 2025.
Bitcoin's price remains susceptible to macroeconomic events and regulatory actions, along with potential interest rate hikes. This has caused a 10.26% decrease in crypto VC inflows, according to Cointelegraph research. Federal Reserve Chairman Jerome Powell's upcoming speech on August 25 in Jackson Hole may provide insight into the Fed's future interest rate policies.
Brian D. Evans, CEO of BDE Ventures, commented on how macro events can impact Bitcoin's present price action, highlighting the likelihood of sideways movement in the market before the next upward trend.
Despite the current challenges, market participants still hold the expectation that Bitcoin's price will recover, particularly as more financial institutions embrace the cryptocurrency. It is important to note that the views and opinions expressed in this news article are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. As with any investment and trading activity, there are inherent risks involved, and individuals should conduct their own research before making any decisions.
Published At
8/24/2023 7:31:05 PM
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