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An Expected Dip? Bitcoin Faces Potential $29,000 Low
Recent data points to a potential decrease in Bitcoin's price, even reaching below the mark of $29,000 in the near future. Let's delve into key factors adding to the bearish trend in Bitcoin's value.
Roadblocks to Rising BTC Prices
Bitcoin had a challenging time shattering the $31,800 ceiling on July 13, and eventually dipped 6.3% to $29,700 by July 17. This fluctuation may hint at investors' unease, with fears of regulatory actions and broader economic instability pushing Bitcoin price perhaps as low as $29,000. This price level was last seen on June 21.
Where derivatives are concerned, Bitcoin futures have seen spiking demand, even as the Asian markets show signs of cooling.
Idle Note on Bitcoin's Futures Market
Bitcoin futures usually possess a minor premium over the spot markets hinging on traders' propensity to receive a little more for deferred settlements. Generally, healthy markets demonstrate BTC futures contracts trading at an annualized premium of 5% to 10%, a scenario known as contango.
Between July 14 and July 17, these futures had a fairly bullish 7% premium, exceeding the average 5%. This indicates somewhat steady faith of the bulls after an unsuccessful bid to surpass $31,800.
Meanwhile, Asia’s Tether (USDT) premium is in decline. This measure gauges the demand of Chinese retail crypto traders, expressing the contrast between peer-to-peer dealings and the U.S. Dollar.
Pressing Regulation Concerns
Regulation of cryptocurrency remains a dominant concern for investors. Even though XRP's court declaration on July 13 declared its exchange and OTC desk sales as compliant, the court refrained from conclusively stating the nature of XRP's initial coin offering. This left investors on edge for other cryptocurrencies’ possible securities designations.
Economic Landscape Unfavorable to Cryptocurrency
The current macroeconomic conditions do little favors for Bitcoin and similar risky assets. China's second-quarter GDP growth fell short of expectations, stalling at 6.3% with factors like the ongoing trade war with the U.S. and government debt control efforts allegedly influencing the slowdown.
With this backdrop and impending court decisions potentially impacting the two largest cryptomarkets, the probability of Bitcoin slipping below $29,000 seems more likely, paving the way for a bearish scenario.
Bitcoin's Potential Downslide Under $29,000
There is no apparent catalyst curbing Bitcoin's upward potential, although deteriorating macroeconomic conditions and hints at further interest rate hikes by the Federal Reserve in 2023. From a trading viewpoint, Bitcoin futures show stronger assurance among professional traders using leverage, although selling pressure stemmed from Asian retail investors may cap crypto's overall gains.
