Bitcoin Price Forecast Amid Divergent Market Sentiment

1 Temmuz 2024

Today’s market analysis on behalf of Rania Gule Market Analyst at XS.com

The cryptocurrency market hasn’t been performing well lately, with Bitcoin giving up a significant portion of its 2024 gains and temporarily dropping below the crucial support level of $60,000 to its lowest point in over a month. However, it has modestly rebounded, starting its monthly trades today, Monday, at $63,355. The negative news and the Fed’s statement about cutting interest rates once this year have negatively impacted risk-sensitive assets like Bitcoin.

Meanwhile, the three-day tech downturn last week, led by Nvidia, extended into the cryptocurrency realm, putting further negative pressure on crypto assets. Interestingly, stocks managed to rebound from this recent dip, unlike cryptocurrencies, highlighting the recent decoupling between these assets once again.

Regarding ETFs, in my view, demand is currently declining in the absence of new catalysts. Spot Bitcoin investment products have just seen their largest two-week outflow since their inception, indicating that despite the initial surge in institutional interest, the path to market and investor confidence may be bumpy.

Recently, the Japanese cryptocurrency exchange Mt. Gox, which was hacked in 2014, announced it is on track to recover some of its customers’ funds. I expect this move to increase selling pressure on Bitcoin because this incoming supply has been out of circulation for over 10 years. Even if beneficiaries are compensated by increasing their holdings, today’s value could be enormous compared to 2014, tempting them to sell to realize unprecedented profits.

Additionally, Bitcoin has outperformed Ethereum and Solana recently, with rising expectations around corresponding ETFs bringing it into the headlines. I anticipate that Ethereum ETFs will begin trading in early July, which could lead to a rise in the second-largest cryptocurrency. We should not forget that Ether hasn’t surpassed its previous high levels from earlier this year.

Solana’s price surged significantly following news that the well-known fund manager VanEck had applied to launch an ETF based on this cryptocurrency. However, SEC approval for a Solana ETF seems uncertain as such a move would open the door to similar investment products for smaller cryptocurrencies. This could increase the risk of the public acquiring easily manipulated assets, potentially leading to significant losses for inexperienced investors in my opinion.

Recent on-chain data showed that large amounts of Bitcoin have entered centralized exchanges in the past few days. How could this affect Bitcoin’s price?

To answer, I would say that Bitcoin investors have been transferring their assets to centralized exchanges in recent days. The relevant indicator here is CryptoQuant’s Exchange Reserve measure, which tracks the total amount of a particular cryptocurrency held in all exchanges.

Notably, the value of this measure rises when investors make more deposits than withdrawals of cryptocurrencies, specifically Bitcoin, in centralized exchanges. Conversely, when the measure’s value drops, it means asset holders are moving their assets out of trading platforms.

According to CryotoQuant data, over 14,000 BTC, approximately valued at $851.2 million, has been sent to cryptocurrency exchanges in the past four days. Even if the price rises in the short term, typically, an increase in the exchange reserve indicates rising selling pressure, as investors often use centralized exchanges to sell assets. Thus, transferring large amounts to trading platforms could exacerbate downward pressures on Bitcoin’s price in the medium term.

According to a blockchain company, Bitcoin’s recovery after declines in the past two weeks has been short-lived. I believe a price rebound is imminent for Bitcoin in the medium term. The rationale behind this analysis is based on two factors: recent negative market sentiment and the decline of the Relative Strength Index (RSI) on the daily chart.

 

Zaid Barem / YMM