The Bitcoin price has seen a modest increase over the past 24 hours, with bulls managing to defend critical support levels. Despite this, recent data suggests that the cryptocurrency is likely to experience further sideways price movement in the near future. At the time of writing, Bitcoin is trading at $29,400, reflecting a 2% profit in the last day. Although similar profits have been recorded over the past week, the overall market has remained stagnant or witnessed losses. The key resistance level for Bitcoin currently stands at approximately $30,000, but repeated attempts to breach this level have proven unsuccessful.
Macroeconomic Influences
Over the past two years, the price of Bitcoin has displayed a correlation with macroeconomic factors, particularly in response to the actions of the U.S. Federal Reserve (Fed) and its interest rate hikes. With the financial institution entering a quiet period due to summer vacations, crypto analysis firm Blofin predicts that Bitcoin and the wider crypto market will likely remain range-bound until September. During this period, both price movements and volatility spikes are expected to decline due to low liquidity. Additionally, institutions hedging their positions will further impact the volatility of the market, prolonging the current sideways price action.
The Impact of Interest Rates
Blofin’s report suggests that potential interest rate hikes are already “somewhat priced in” and may not be sufficient to push Bitcoin above the $30,000 mark. This could continue until May 2023, as inflation, the primary driver behind the interest rate hikes, becomes more persistent. Consequently, the prevailing macroeconomic landscape may result in further sideways price movement until that time, or until the U.S. Fed makes the decision to reduce interest rates, potentially leading to increased risk appetite within the sector.
Investor Sentiment and Trading Volume
According to Blofin, the lack of liquidity in the market has left investors with little interest in trading and has thus contributed to the decline in monthly trading volume across crypto exchanges since July 2022. This lack of interest is also reflected in the intraday price movements of Bitcoin, which have remained at around 0.1% for an extended period. In fact, this level of stability has not been witnessed in the cryptocurrency’s history. As a result, Blofin believes that both Bitcoin and Ethereum are likely to see a dip in prices due to the lack of strength surrounding them. The firm suggests that when Bitcoin’s price hovers around $30,000 and Ethereum’s price hovers around $2,000, both cryptocurrencies will lose further upward momentum and may experience a period of consolidation or decline.
Although Bitcoin has shown some signs of recovery in the past 24 hours, the overall market outlook remains uncertain. The influence of macroeconomic factors, specifically the actions of the U.S. Federal Reserve, is currently keeping the cryptocurrency in a range-bound state. The lack of investor interest and declining trading volume further support the expectation of continued sideways price movement. While interest rate hikes may not be sufficient to propel Bitcoin above $30,000, a potential cut in interest rates could introduce more risk appetite and potentially drive price breakouts. As the market progresses, it will be important to closely monitor these factors and their impact on Bitcoin’s price and future direction.
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