Data suggests that the price of Bitcoin is likely to drop below $29,000 in the near future.
The inability to break above $31,800 on July 13 led to a 6.3% correction, bringing the price down to $29,700 on July 17.
Investors are concerned that ongoing regulatory developments and macroeconomic challenges could push Bitcoin below the $29,000 level, last seen on June 21.
Bitcoin futures indicate increased demand, but Asian markets are slowing down. Typically, Bitcoin futures trade at a slight premium compared to spot markets, indicating sellers’ willingness to delay settlement for more money.
Healthy markets usually exhibit BTC futures contracts trading at a 5% to 10% annualized premium.
Between July 14 and July 17, BTC futures maintained a 7% premium, surpassing the 5% threshold, suggesting moderate conviction among bulls after the unsuccessful attempt to break above $31,800.
However, the premium of Tether (USDT) in Asia has been decreasing. The stablecoin premium serves as an indicator of demand from China-based retail crypto traders, measuring the difference between peer-to-peer trades and the U.S. dollar.
The recent Tether premium in Asia reached a discount of 1.8%, its lowest point in over six months.
This widening discount trend, starting on July 12, indicates moderate sell pressure.
Regulatory concerns continue to affect the crypto sector.
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While the July 13 ruling that the sale of XRP via exchanges and over-the-counter desks did not violate securities regulations boosted markets, it did not definitively determine whether XRP’s initial coin offering was classified as a security offering.
This lack of clarity unsettles some investors, raising the possibility of other cryptocurrencies facing similar designations.
Additionally, Binance’s layoff of 1,000 employees and the departure of key executives, along with ongoing court actions from the Securities and Exchange Commission, have raised concerns about the future of the exchange.
Macroeconomic trends also pose challenges for Bitcoin and risk-on assets. China’s second-quarter gross domestic product growth fell short of expectations due to factors like the trade war with the United States and the government’s efforts to address debt.
These external factors, along with impending court decisions that could negatively impact major exchanges, increase the likelihood of Bitcoin dropping below $29,000.
In terms of trading, BTC futures indicate higher confidence among professional traders using leverage. However, sell pressure from retail investors in Asia limits the overall upside potential for cryptocurrencies.
Without a specific catalyst to drive it higher, Bitcoin’s price is susceptible to worsening macroeconomic conditions and indications of interest rate increases by the Federal Reserve in 2023.
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