Bitcoin price hovers tightly below the $35,000 zone for several weeks, downtrend could be coming to an end
Most big-name cryptocurrencies like Bitcoin and Ether inched up roughly 3%, maintaining under $34,000 and $2,300, respectively. Bitcoin price has been trading between $30,000 to $40,000 roughly for the past seven weeks, seemingly unbothered by the onslaught of announcements.
BTC/USD 4-hour chart | Source: TradingView
Bitcoin price holds a pattern of daily higher lows
Bitcoin now is trading around $33,400 but still recording a drop of around 3% over the past week. The optimism surrounding the cryptocurrency market improved. Especially as BTC’s range-bound action seems to be increasing the confidence of institutional investors looking to continue investing in the cryptocurrency. Specifically, Marshall Wace, a London-based hedge fund, has announced plans to invest in the digital asset space.
A survey of asset managers and institutional investors who already hold crypto, from the US, UK, France, Germany, and the UAE found that 82% of the respondents expect to increase their investments in digital assets by 2023. Of these, only 7% of participants plan to reduce their exposure to cryptocurrencies, while 40% plan to significantly increase their holdings.
According to a report by CoinShares, they also highlight the level of interest in cryptocurrency by institutional investors. In it, they revealed a total of $63 million by institutions pouring into digital asset funds. The purchase was widespread as all the individual digital assets with dedicated funds saw their first inflows in nine weeks.
“For the first time in 9 weeks, inflows were seen across all individual digital assets implying a turnaround in sentiment amongst investors”, wrote James Butterfill, an investment strategist for CoinShares.
Bitcoin took the lead, with total inflows of $38.9 million | Source: CoinShares
However, the emergence of institutional investors is unlikely to lead to a sharp increase in cryptocurrency prices in the short term. This is because institutions gradually accumulate their desired exposure before pushing the price higher.
Elsewhere, Ether has outperformed BTC and is up around 3% over the past week. It is attempting to break above the 50-day MA for the first time since March. A confirmed breakout would yield further upside towards $2,800 resistance. Similar to BTC, ETH is consolidating after a volatile sell-off in May.
Ether’s outperformance relative to Bitcoin and gold this year can be seen as the chart below:
Returns for Bitcoin, Ether, and gold this year | Source: CoinDesk Research
Accordingly, the price of Ethereum gas recently fell to its lowest level since March 2020, according to CoinMetrics.
Although the drop corresponded to a decline in the price of ETH, the gas price downtrend started in April, before ETH collapsed when the Ethereum gas limit was raised to around 15 million on April 22 and the solutions Ethereum scaling has begun.
Ethereum gas price | Source: CoinMetrics
Overall, Bitcoin price continues to trade volatile despite seeing an uptrend over the past few days. Any weakness in the broader markets or a drop in liquidity could cause a sharp drop in volatility in BTC down and we will continue to see this reflected in options data as puts trade at a premium to calls for July and August expiry.
Expect Bitcoin to level off as trading volume continues to decline since the sell-off in May.
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