Market wrap: what’s next for Bitcoin after a break below $ 30,000

Bitcoin has stabilized around $ 29,600 at the time of publication on Tuesday after falling below the important $ 30,000 level on Monday. The world’s largest cryptocurrency has been in a downtrend since it failed to hit an all-time high of around $ 63,000 in April. Concerns about regulatory risks, less accommodative monetary policy and weakening institutional demand have contributed to selling pressures in recent months.

Edward Moya, analyst at currency brokerage firm Oanda, described the bitcoin business environment as a “tug-of-war between bears and bulls,” in an email to CoinDesk.

“Bitcoin’s longer-term bullish outlook hinges on widespread adoption in the United States and Europe, and for some this appears to be at risk,” Moya wrote.

The European Union Commission is proposing an overhaul of anti-money laundering rules, which could include a ban on anonymous crypto asset wallets. It didn’t help market sentiment on Tuesday, according to Moya.

“We find that at the federal and state levels, the decline in the price of bitcoin and the resulting financial losses for many retail investors will only heighten further scrutiny of regulation in this market,” Timothy wrote. Butler, partner at Troutman Pepper, in an email to CoinDesk.

Along with regulatory uncertainty, traders will also be attentive to comments from Tesla CEO Elon Musk, who is due to speak at The B Word conference on Wednesday. Musk’s appearance is particularly timely given the potential for bitcoin to drop to $ 25,000, which would mean Tesla could experience a $ 300 million impact on its earnings, according to Shawn Tully, senior editor at Fortune.

Short-term implied volatility increased as bitcoin fell below $ 30,000, indicating that cryptocurrency options traders are seeing prices move sharply. Volume, however, remains low, in the $ 20,000 to $ 30,000 price range.

“Continuing pressure at these levels could see further declines,” Nathan Cox, chief investment officer of digital asset investment firm Two Prime, wrote in an email to CoinDesk.

Bitcoin futures on the Chicago Mercantile Exchange (CME) have gone “backwards”, which is when the futures contracts trade below the spot price. This is the second time that regulated futures on the CME have traded offsets in the past seven days, according to a report released Tuesday by Arcane Research.

“Institutional investors seem very cautious at the moment and in general appear to be reducing their risk,” Arcane wrote.

“The downward trend in the futures market indicates that fear accumulates as traders are no longer willing to pay a premium for their exposure.”

Bitcoin’s pullback, or the percentage decline from April’s peak around $ 63,000, is around 50%. Typically, prints above 50% can last for several months, such as in 2018 and the second half of 2019.

Two decisive daily closings under $ 30,000 are needed to confirm an outage, wrote Katie Stockton, managing director of Fairlead Strategies, in an email to CoinDesk. For now, secondary support is $ 27,000, which bitcoin will need to hold to maintain a long-term uptrend.

The Purpose Exchange-Traded Fund, one of the first bitcoin exchange-traded products (ETPs) approved, saw a slowdown in net inflows this week after experiencing a period of relatively strong demand in May and June, according to a Glassnode report. .

The slowdown suggests that institutional demand for the largest currency by market cap remains low for these regulated products, according to Glassnode.

Of the 42 cryptocurrency experts surveyed by Finder, 61% believe bitcoin is currently undervalued, while experts on average expect bitcoin to hit $ 66,284 per BTC by the end of 2021.

“Adoption by businesses and institutional investors coupled with loose monetary policy and high asset inflation will propel bitcoin into six digits before the end of this year,” Morpher CEO Martin Fröehler told Finder, the most optimistic among the panelists.

University of Canberra keynote speaker John Hawkins, one of the more bearish panelists, said the government’s adoption of bitcoin will negatively affect the price of cryptocurrency. “I guess El Salvador adopts it as legal tender puts a floor for a while. But once the price has come down a lot, they can remove the legal tender status. “

Most digital assets on CoinDesk 20 ended lower on Tuesday. In fact, everything was in the red with the exception of the dollar-linked stablecoins.