Bitcoin Price To Stay Below $30,000, Thick Cap To Hinder Recovery?

Image by: Yann Allegre – Unsplash

Bitcoin price has seen a slight increase in the last 24 hours as the bulls defended the critical support. The leading cryptocurrency by market cap may make another attempt to scale above critical resistance, but recent data suggests further sideways movement in prices.

As of this writing, Bitcoin is trading at $29,400 with a 2% gain over the past day. Over the past week, the cryptocurrency has posted similar gains while the rest of the market has been flat or posted losses. The key resistance stands around $30,000, but BTC has failed to break it every time lately.

After a breakout on the daily chart, BTC price is moving sideways. Source: BTCUSDT trade view

Bitcoin price preparing for… monotony?

For the past two years, bitcoin price has moved in tandem with macroeconomic forces. BTC is particularly reacting to tensions from the US Federal Reserve (Fed) and its rate hike program.

Due to the summer holidays, the financial institution is going into a quiet phase. As a result, according to crypto analytics firm Blofin, Bitcoin and the crypto market are likely to remain in their current range through September.

During this period, price action and volatility spikes will continue to decline as the low liquidity environment impacts price action and institutions hedging their positions affect volatility, Blofin explained.

Additionally, the report claims that potential rate hikes are “reasonably priced in” and may not help propel BTC above $30,000. The current macroeconomic situation could last until May 2023 as inflation, the main reason for the rate hike, becomes stubborn.

Until that period, or until the US Federal Reserve decides to cut interest rates, this could result in prices moving sideways, paving the way for more risk-taking across the sector. Blofin explained:

(…) Investors seem to have gotten used to everyday life with high interest rates. The lack of liquidity has meant that investors have little interest in “trading”. Most investors sit apart.

Bitcoin investors prepare for impact

The chart below shows that monthly trading volume on crypto exchanges has been declining since July 2022. The report states that this status quo reflects investors’ lack of interest in crypto, with BTC seeing intra-day price movements of around 0.1%, a first for the cryptocurrency in this space over an extended period of time.

Trading volume on crypto exchanges. Source: IntoTheBlock via Blofin

With that in mind, the crypto research firm believes prices are likely to fall due to the lack of strength surrounding BTC and ETH:

(…) It is not difficult to note that when the price of BTC is around $30,000 and the price of ETH is around $2,000, both continue to lose bullish momentum here, linger for a while and then fall. The time to reach both levels was short or long, however, further price breakouts did not occur. There seems to be an invisible ceiling around these two levels (…)

Cover image from Unsplash, chart from Tradingview

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