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Bitcoin is still facing difficulty in consolidating above the $57,000 level and is continuing to decline today for the third day in a row.
While the relative stability of prices slightly with some upward tendency during the beginning of the week may prompt an end to an extended series of four consecutive weeks of losses.
While the recovery was from below 54,000 to slightly above 57,000, with almost eliminating the most important factors pressuring prices, which are the huge selling waves issued by the German government’s Bitcoin wallet that it had seized. Of these approximately 50,000, only 9,000 Bitcoins are now in the government’s possession.
However, the negative impact on investor sentiment resulting from this violent downward trend in Bitcoin, which brought it to its lowest levels since February, does not seem to fade away soon.
While levels at $60,000 and below looked attractive and constituted a suitable buying point, a continued failure to recover these levels could keep sentiment very low. While this sentiment was not already at its best with the continued rejection from the $72,000 level despite a number of supportive factors in the previous months – Bitcoin spot ETFs, billions of flows, and the halving event.
The value of open interest for Bitcoin futures is still near the lowest levels since last May, at about $26 billion, or less than 500,000 Bitcoin, which is approximately the lowest level since late May, according to CoinGlass. Despite the low levels of prices, we do not find this momentum in futures, which could have indicated high sentiment around future levels.
Also, since last Wednesday, the ratio of long to short positions in Bitcoin futures remains below 1 despite some recovery in prices, which I believe is another sign of frustration among buyers and control of sellers.
Also, futures traders do not show optimism in the future of prices. Deribit’s futures, which run from July 19 to June 2025, target no more than $62,800 per bitcoin. In finance, futures prices are among the best unbiased predictors for future spot prices and in turn reflect traders’ expectations and available information.
Today also marks the exercising date for more than $1.3 billion worth of Bitcoin options at Deribit. However, the problem is if Bitcoin can only advance slightly to 58,500, then we have reached the maximum pain price. The intrinsic value of those options will not be more than $8.2 million, so there is some momentum that the markets may miss that would have come from those options.
Despite all this, Bitcoin spot ETFs have been able to record positive net inflows since last Friday, amounting to more than $880 million, according to SoSo Value. In a counter sign, investors and fund managers in Wall Street see current levels as an attractive buying point.
Also, this correction would remove one of the key obstacles that take away the focus of investors – retail in particular – from Bitcoin. Citing CoinDesk, Capriole’s Speculation Index, which expresses the percentage of altcoins that outperform Bitcoin over a 90-day period, is near one-year lows at 10% and had fallen to 4% earlier. This poor performance of altcoins, especially those that lack the benefit of their existence, would weaken the meme coins mania, which contributes to investors’ money being diverted away from Bitcoin or even major alts such as Ethereum. Therefore, the decline in the intensity of speculation may make future gains more sustainable and based on supportive market fundamentals, away from short-term rush for the goal of quick profit.
What cryptocurrencies also need is more adoption and not just getting rid of the speculative nature that dominates their transactions until now. This widespread adoption at the level of beneficial use, both by large institutions and individuals, requires more regulatory flexibility and a clearer and more specific legislative environment.
In this regard, the SEC will not take any action against Paxos regarding the issuance of the stablecoin Binanca USD (BUSD), which the SEC claimed was an unregistered security offering. This measure would be a step towards greater confidence in the regulatory environment, which could gradually pave the way for enhancing the adoption of cryptocurrency technology, as stablecoin account for more than $162 billion worth of the market as a whole. It will also form a pillar for payment and transfer systems based on this technology because it eliminates the uncertainty caused by other cryptocurrencies with volatile prices.
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