Bitcoin price dipped below $34,000 as selling pressure increased into July
Bitcoin price has ranged from $30,100 to $36,800 over the past 12 days and it is difficult to pinpoint the exact reason for the lack of interest among investors. Bitcoin has now dipped below $34,000 as selling pressure increased in July. However, traders expect buyers to continue operating above the $30,000 support as sentiment improves.
Bitcoin price and the sentiment is improving despite profit-taking into July
Besides dropping to nearly $29,000 on June 22, BTC has approached $30,000 several times during the month. After that, BTC repeatedly dropped to intraday lows in the $31,000 region. These repeated attempts, and their respective failures, help illustrate the strength of support around that level.
Upon testing the lower end of that range, BTC is down more than 50% from its all-time high near $65,000 reached in April. The fact that the cryptocurrency has plummeted, has sparked debate as to whether or not it has fallen into a bear market. However, this issue remains unresolved, as there is no consensus on exactly what constitutes a BTC bear market.
To Crypto Quant, since BTC price peaked in mid-April, the number and size of US institutional outflows (via Coinbase) have decreased gradually.
As shown, there were four large outflows pre-crash (in green), and even two more sizable outflows mid-crash (in yellow), as institutions tried to buy the dip. However, it’s clear institutional investors have been scarred by the crash, with only two smallish outflows since May 24 (orange & red). Until sizable outflows return, upward price momentum may be muted.
But not without positive signs. The recent positive update in Bitcoin’s funding rate is a bullish signal. It is the cost to fund long positions in the market for bitcoin perpetual swaps, a type of derivative in the cryptocurrency markets similar to futures contracts in traditional markets.
“Funding rates represent traders’ sentiments of which position they bet on in the perpetual swaps market,” tweeted CryptoQuant. “Positive funding rates imply that many traders are bullish and long traders pay funding to short traders.”
Elsewhere, data shows that ETH is getting locked up long-term with several large inflows to the ETH 2.0 deposit contract. More than 5% of the circulating supply is already locked in staking and thus illiquid.
Paired with sideways movement in the ETH reserves (all exchanges) and decreasing net flows, it looks like ranging will go on for a while, still, but the long-term outlook remains positive despite prices oscillating at critical levels.
In terms of price, ETH has been outperforming BTC over the past few days, and the technical charts show that the uptrend continues. The ETH/BTC pair holds support at the 100-day moving average as the charts signal oversold conditions and improving momentum. This ratio has dropped from resistance in May, prior to the broader crypto sell-off.
Looking at the 90-day correlation between Bitcoin and Ether, it can be seen that the two cryptocurrencies are less correlated than they were a year ago despite a slight improvement in co-movement over the past quarter.
The chart shows a 90-day correlation between BTC and ETH | Source: CoinDesk
At press time, ETH is trading around $2,000, recorded a 5% gain over the past seven days. Altcoins meanwhile slipped from prior strength, with losses broadly beating Bitcoin’s slight downturn to hit 5% or more.
Positive news could limit downside moves after a volatile first half of the year. Concerns about regulatory concerns appear to have eased, especially as the bitcoin hashrate stabilized after falling for 10 straight days. The hashrate decline was mostly due to China’s shutdown of several cryptocurrency mining operations in the country. And hopefully, we will have more positive news, boosting Bitcoin price momentum in the near term.
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