Multiple pieces of data point to the Bitcoin price falling below $29,000 in the short term.
Yes, you read that right.
Let’s investigate the main issues contributing to the current downside in the Bitcoin price.
Bitcoin (BTC) encountered difficulties breaking above $31,800 on July 13, resulting in a 6.3% correction down to $29,700 on July 17. The price action could reflect investors’ concerns that ongoing regulatory developments and macroeconomic headwinds could drive Bitcoin below the $29,000 level, which was last observed on June 21.
On the derivatives side, Bitcoin futures show increased demand, but Asian markets are slowing down.
Bitcoin quarterly futures typically trade at a slight premium compared to spot markets, reflecting sellers’ willingness to receive more money in exchange for delaying settlement. Healthy markets generally exhibit BTC futures contracts trading at a 5% to 10% annualized premium, a situation known as contango, which is not unique to crypto markets.
Bitcoin 3-month futures premium. Source: Laevitas
Between July 14 and July 17, BTC futures maintained a neutral-to-bullish 7% premium, surpassing the 5% threshold. This suggests moderate conviction among bulls following the unsuccessful attempt to break above $31,800.
However, the Tether (USDT) premium in Asia has been declining. The stablecoin premium serves as an indicator of demand from China-based retail crypto traders, measuring the difference between peer-to-peer trades and the U.S. dollar.
Tether (USDT) peer-to-peer vs. USD/CNY. Source: OKX
The Tether premium in Asia recently reached a discount of 1.8%, marking its lowest point in over six months. This inverse premium trend started on July 12 and has continued to widen, indicating moderate sell pressure.
Regulatory worries continue to plague crypto
Regulation of the crypto sector is also still on investors’ minds. Even though the July 13 ruling that the sale of XRP (XRP) via exchanges and over-the-counter desks did not violate securities regulations did boost markets, the court’s decision did not definitively determine whether XRP’s initial coin offering was classified as a…
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