Bitcoin fell 1.93% from July 21 to July 28 to US$29,199 at 6:30 p.m. Friday in Hong Kong. The world’s largest cryptocurrency by market capitalization has been trading under the US$30,000 mark for most of the week. Ether lost 1.02% over the week to US$1,867.
This week, Bitcoin lost the US$30,000 support level on Sunday, after briefly touching US$30,291, and remained below US$30,000 since.
“The fact that Bitcoin is trading below US$30,000 is due to several factors, including a short-term lack of positive catalysts and the fact that the ETF narrative is slowly fading as there are currently no new developments,” Jonas Betz, crypto market analyst and founder of consultancy firm Betz Crypto, told Forkast.
“In addition, long positions in leveraged futures worth US$30 million were liquidated on July 24, amplifying Bitcoin’s sudden price decline.”
The U.S. Federal Reserve raised interest rates by 25 basis points to between 5.25% to 5.5% on Wednesday, in line with market expectations, putting borrowing costs at the highest level in 22 years. But investors remained optimistic after Fed Chair Jerome Powell indicated that its next interest rate decision will be data-dependent, meaning that it could pause the rate hiking cycle in September.
“Interest rates now stand at a 22-year high, which could ultimately strengthen the dollar. That would be bearish for Bitcoin and crypto prices in the short term. Traditionally, when central banks raise interest rates, it can have a negative impact on investor sentiment across various asset classes,” Lucas Kiely, chief investment officer of digital asset platform Yield App, told Forkast.
“Higher interest rates could continue to increase the costs of borrowing, thus reducing liquidity in the crypto market. In recent history, the crypto market has been generally immune to macroeconomic events.”
Aziz Kenjaev, financial analyst and director of business development at cross-chain liquidity protocol Entangle, said that the Fed’s interest rate decision was the main factor impacting Bitcoin price this week.
“Bitcoin’s price move after the Fed rate decision is directly correlated to its counterpart, the U.S. Dollar Index, which is down 0.43% whereas Bitcoin is up 0.4%… Closing below US$30,000 demonstrated the lack of liquidity and purchasing power and there are no signs of fulfillment of these yet, hence Bitcoin might stay below US$30,000 until next week,” said Kenjaev to Forkast.
On Thursday, the European Central Bank also raised interest rates by 25 basis points in its
ninth consecutive rate hike. This puts the Eurozone benchmark borrowing rate at a 22-year high of 3.75%. Interest rate last peaked in 2001 when Europe tried to boost the value of the newly launched euro.
The global crypto market capitalization stood at US$1.18 trillion on Friday at 6:30 p.m. in Hong Kong, down 1.66% from US$1.2 trillion a week ago, according to CoinMarketCap data. With a market cap of US$567 billion, Bitcoin represented 48.1% of the market while Ether, valued at US$225 billion, accounted for 19.1%.
Notable Movers: XDC, CSPR
Open-source blockchain protocol XDC Network’s XDC token was the week’s biggest gainer in the top 100, rising 39.96% to US$0.05903. The token started picking up momentum on Saturday, two days after announcing that XDC was a gold sponsor of the WebX Asia conference in Tokyo.
Proof-of-stake blockchain Casper Network’s CSPR coin was this week’s second biggest gainer, with a 12.66% price increase to US$0.04023. The coin started its rally last Friday, after the protocol announced a major upgrade to the Casper Wallet, that allows the buying of CSPR tokens directly with a credit card as well as native CSPR transfers and ERC-20 token support.
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Next week: Can Bitcoin hold above US$28,000?
Investors will be anticipating the release of the U.S. jobs report next Friday, which includes economic indicators such as nonfarm payrolls typically used by economists to gauge the Fed’s next monetary policy decision.
In the crypto space, proof-of-work blockchain Litecoin’s halving on Aug. 5 will reduce block rewards for miners from 12.5 to 6.25 Litecoin per block.
“If Bitcoin fails to maintain its position above the US$30,000 level, the next major support is around US$28,000, which has previously acted as a strong support zone during previous corrections. Such a bearish scenario, however, could trigger increased selling pressure and potentially lead to further declines,” wrote Yield App’s Kiely.
Bitcoin’s volume profile suggests that its fair value is around US$28,000, which is the price level where most trading volume occurred between March and July, Johnny Louey, a crypto research analyst at trading platform LiquidityTech Protocol told Forkast.
“In the upcoming phase of price discovery, US$28,000 is expected to serve as a crucial checkpoint for Bitcoin’s valuation. If the price exceeds this level, it signals the market’s willingness to discover an increasing fair value for Bitcoin,” wrote Louey, referencing the below chart.
Entangle Protocol’s Kenjaev said that Bitcoin’s bearish momentum will likely continue in the next week.
“The market and its participants are waiting for two major levels: US$28,500 buyers and US$30,000 sellers. Thus, the faster the support at US$28,500 is reached the sooner we will see a solid upwards momentum toward breaking of the US$30,000 resistance,” wrote Kenjaev, referencing the below chart.
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