Bitcoin retreats from 13-month peak on fears of further rate hikes – Cryptocurrency News
July 7, 2023 11:28 am
After a period of choppy trading in which Bitcoin remained flat comfortably above the $30,000 psychological mark, Thursday’s events brought back some volatility. On that day, the king of cryptos stormed to a fresh 13-month high of $31,500 before retreating lower on the back of a significantly stronger-than-expected ADP employment report. As positivity driven by institutional interest is fading due to regulatory and macroeconomic concerns, what does the second half of 2023 hold for cryptocurrencies?
Tremendous half despite adverse backdrop
Cryptocurrencies had a stellar first half of the year, crushing major US indices, which is a massive accomplishment considering that the tech-heavy Nasdaq 100 had its best half in 40 years. More surprisingly, this rally happened in a period of a major regulatory crackdown by the US authorities which came after a series of scandals, frauds and failures within the crypto space. So how did cryptos rally?
There were three major drivers behind the gains within the cryptocurrency sphere. Firstly, the anticipation of a more accommodative Fed based on signs that inflation is cooling helped both digital assets and tech stocks to rise during the first half.
In more idiosyncratic factors, cryptos capitalised on the banking crisis during March when investors sought assets shielded from systemic failures to allocate their savings. Moreover, the biggest contributor to the latest advance was the increasing institutional interest for cryptos, which came from big players in the traditional finance industry that had severely criticised cryptocurrencies and their usefulness in the past.
Narrative wanes but positivity holds
Even though the discussion around the recent spot-Bitcoin ETF applications induced upward pressure on crypto prices and led to fresh highs, it seems that it has now taken the back seat. This was evident when the SEC flagged flaws and inadequacies in recent filings, but crypto prices remained unhindered. Financial giants such as BlackRock and Fidelity refiled for ETFs that would track Bitcoin’s spot price to address SEC’s concerns but there is still no concrete evidence that they will manage to get the green light this time.
Despite these negative developments regarding institutional interest, Bitcoin jumped to a fresh 13-month peak, indicating a broader euphoria before temporarily declining below the $30,000 mark. Macroeconomic developments led to that drop as an impressively strong ADP jobs report supported by solid PMI releases reaffirmed that the US economy remains in pretty good shape, triggering bets for a more aggressive future stance by the Fed. Will the upcoming NFP reinforce the fact that macro conditions are starting to be the dominant force behind crypto prices?
Is there a breakout in sight?
Taking a technical look at BTCUSD, we can see that despite posting a fresh 13-month peak of $31,500, the price failed to extend its advance and retraced back within its recent range. Hence, it seems that Bitcoin has entered a consolidation phase, which could be soon followed by a breakout towards either direction.
To the upside, the price could initially test the recent 13-month peak of $31,500 before heading higher to challenge the May 2022 resistance of $32,350.
On the flipside, bearish actions could push the price towards $29,465, which is the lower boundary of its sideways move. Further declines could then come to a halt at the previous resistance of $28,450.
After a period of choppy trading in which Bitcoin remained flat comfortably above the $30,000 psychological mark, Thursday’s events brought back some volatility. On that day, the king of cryptos stormed to a fresh 13-month high of $31,500 before retreating lower on the back of a significantly stronger-than-expected ADP employment report. As positivity driven by institutional interest is fading due to regulatory and macroeconomic concerns, what does the second half of 2023 hold for cryptocurrencies?
Tremendous half despite adverse backdrop
Cryptocurrencies had a stellar first half of the year, crushing major US indices, which is a massive accomplishment considering that the tech-heavy Nasdaq 100 had its best half in 40 years. More surprisingly, this rally happened in a period of a major regulatory crackdown by the US authorities which came after a series of scandals, frauds and failures within the crypto space. So how did cryptos rally?
There were three major drivers behind the gains within the cryptocurrency sphere. Firstly, the anticipation of a more accommodative Fed based on signs that inflation is cooling helped both digital assets and tech stocks to rise during the first half.
In more idiosyncratic factors, cryptos capitalised on the banking crisis during March when investors sought assets shielded from systemic failures to allocate their savings. Moreover, the biggest contributor to the latest advance was the increasing institutional interest for cryptos, which came from big players in the traditional finance industry that had severely criticised cryptocurrencies and their usefulness in the past.
Narrative wanes but positivity holds
Even though the discussion around the recent spot-Bitcoin ETF applications induced upward pressure on crypto prices and led to fresh highs, it seems that it has now taken the back seat. This was evident when the SEC flagged flaws and inadequacies in recent filings, but crypto prices remained unhindered. Financial giants such as BlackRock and Fidelity refiled for ETFs that would track Bitcoin’s spot price to address SEC’s concerns but there is still no concrete evidence that they will manage to get the green light this time.
Despite these negative developments regarding institutional interest, Bitcoin jumped to a fresh 13-month peak, indicating a broader euphoria before temporarily declining below the $30,000 mark. Macroeconomic developments led to that drop as an impressively strong ADP jobs report supported by solid PMI releases reaffirmed that the US economy remains in pretty good shape, triggering bets for a more aggressive future stance by the Fed. Will the upcoming NFP reinforce the fact that macro conditions are starting to be the dominant force behind crypto prices?
Is there a breakout in sight?
Taking a technical look at BTCUSD, we can see that despite posting a fresh 13-month peak of $31,500, the price failed to extend its advance and retraced back within its recent range. Hence, it seems that Bitcoin has entered a consolidation phase, which could be soon followed by a breakout towards either direction.
To the upside, the price could initially test the recent 13-month peak of $31,500 before heading higher to challenge the May 2022 resistance of $32,350.
On the flipside, bearish actions could push the price towards $29,465, which is the lower boundary of its sideways move. Further declines could then come to a halt at the previous resistance of $28,450.
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