Bitcoin is gradually bouncing back after sliding below a significant psychological level, as Elon Musk’s recent statement at the ‘B Word’ Conference improved sentiment. Yet, experts claim that volatility will persist despite trading volumes that remain muted.
The Fundamental Look
Bitcoin remains stuck in the low $30,000s, with prices briefly dropping below $30,000 on July 21, 2021. Yet, despite the prevailing bearish slant amongst traders, ‘Dogefather’ Elon Musk’s appearance at The ‘B Word’ Conference reversed sentiment to an extent, forcing short sellers to start covering positions.
Following Musk’s announcement that SpaceX reflects its Bitcoin holdings on its balance sheet and is holding BTC for the long run, and that Elon personally has Bitcoin, prices of the seminal cryptocurrency and other major tokens began accelerating upwards. As of July 22nd, Bitcoin was trading around the $32,000-mark, gaining more than 8% over the past 24 hours.
Persistent regulatory concerns and a sharp drop in institutional demand may also have contributed to recent selling pressure in Bitcoin. As per a report by Glassnode, demand for exchange-traded products (ETPs) has fallen sharply in July after witnessing high demand in May and June, further contributing to the bearish bias.
Meanwhile, Bitcoin’s mining difficulty rate recorded its fourth consecutive drop (the first instance since 2011), staggering to an 18-month low of 13.67 trillion, which is 45% lower than mid-May’s 25.05 trillion in difficulty. Another event that may impact mining is the news that Malaysian police have seized Bitcoin mining rigs worth over $1.3 million.
In the payments arena, Square plans to build a new “Bitcoin Platform” for decentralized finance and a hardware wallet for Bitcoin. Finally, Crazy Horse 3, an infamous Las Vegas adult entertainment venue, has started accepting Bitcoin as payment using Lightning Network to speed up payments and offer more privacy to customers. (See Bitcoin stock comparison on TipRanks)
Whales of the Week
- July 16: 2,999.746 BTC moved between unknown wallets
- July 16: 5,000.000 BTC moved from multiple addresses to Binance
- July 17: 36,000.408 BTC moved from multiple addresses to an unknown wallet
- July 17: 13,003.019 BTC moved from multiple addresses to Coinbase
- July 18: 3,390.880 BTC moved between unknown wallets
- July 20: 7,973.754 BTC moved between unknown wallets
- July 21: 3,169.894 BTC moved from multiple addresses to an unknown wallet
The Technical Take
From July 16th to July 22nd, Bitcoin rose just barely against the US dollar, gaining 2.75%, outperforming Cardano’s -4.56% slide while lagging Ethereum’s gain of 3.60% over the same period. A look at derivatives activity shows that the number of open positions in Bitcoin futures continues to rise, reaching a two-month high as traders go short. Falling prices and rising open interest echoes bearish sentiment among the traders, which may add to volatility going forward.
The long-term trend in BTCUSD remains to the downside, with the more medium-term upper line of the downward equidistant channel being tested by the latest ramp higher in prices. Trading volumes picked up slightly compared to the prior week yet remain subdued compared to May and June.
Should Bitcoin move above this upper channel line accompanied by higher volumes, it could signal a breakout that tests resistance sitting at $32,900 and $34,250. However, with a descending triangle pattern setting up for approximately two months, any close below support at $29,850 could see prices break down to support sitting at $28,600 and $27,400.
Disclosure: Reuben Jackson held no position in any of the stocks mentioned in this article at the time of publication.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.
