Unforeseen Factors Restrict Bitcoin Whats Keeping BTC below 58K
Bitcoin’s price has remained stagnant below $58,000 for an extended period of time, causing frustration among investors. Despite being in a bull market, Bitcoin has failed to gain momentum, and both market and non-market factors are to blame.
One significant factor impacting Bitcoin’s price is the US Consumer Price Index (CPI), which rose by 3% in June. While analysts view this as a positive sign for Bitcoin, the price has not seen a corresponding increase. If the US central bank decides to cut interest rates, it will decrease the appeal of fixed-income investments and push people towards investments with higher returns.
Chris Larkin, managing director of trading and investing at E-Trade, stated that the Federal Reserve (Fed) is inching closer to a rate cut in September, especially after seeing a 3.9% decline in real average hourly earnings for workers compared to the previous year. Additionally, the labor force participation rate saw a slight increase from 62.5% in May to 62.6% in June. Despite these indicators pointing towards a higher likelihood of rate cuts and a 90% consensus for at least one 0.25% rate cut by September, Bitcoin’s price remains below $60,000. In contrast, the S&P 500 stock market index is only 0.5% below its all-time high, and gold is trading 1.2% below its record high of $2,450 in May 2024. Even the Russell 2000 small-cap index, which excludes the 1000 largest US-listed companies, experienced a 3% increase on July 11.
Another factor impacting Bitcoin’s price is the German government’s continued sale of nearly 50,000 bitcoins, which were seized in 2013 and are now worth almost $3 billion. According to Watcher Guru, the German government currently holds only $285 million worth of BTC.
As a result of these issues, the market sentiment feels bearish despite being in a bull market. Bitcoin is currently trading at $57,412, with an RSI value of 48.30. The Bitcoin chart shows a significant rejection at $59,500, a strong resistance zone where the MA100 is also located. This 3.87% drop has pushed Bitcoin back into the triangle zone, indicating that bears currently have a strong hold.
Bitcoin’s market cap has also decreased to $1.1 trillion, causing concern among investors. Sources suggest that while retail investors face selling pressure, BTC whales and sharks are accumulating more Bitcoin. Once the German government completes its BTC sales and the pressure for Mt. Gox repayments eases, the market may stabilize. However, it could take another 1-2 months for everything to settle down.
In conclusion, Bitcoin’s price has been stagnant below $58,000 due to various factors such as the US CPI, the German government’s BTC sales, and market sentiment. While these challenges persist, investors remain hopeful for a market turnaround in the near future.