Weekly feature: our experts analyzed the market situation and told how it may change in the short term for Bitcoin

The week from July 31 to August 6 was relatively quiet. The BTC/USDt pair traded in the range of $28,585 – $30,047. Increased volatility in the market was observed on August 1 and 2. On August 1, the price of Bitcoin fell to $28,585. The market was pressurized by fears of regulatory action by the Securities and Exchange Commission (SEC) regarding the crypto projects Hex, PulseChain and PulseX. The hack of the Curve crypto exchange was also negatively impacted. And as a result of which hackers stole about $50 million. Despite the fall in quotes in the first half of the day, the daily candle closed with growth at $29,705.

On August 2, Bitcoin was recovering to $30,047. There are two reasons that may have provided support for buyers:

The first one is the release of MicroStrategy’s Q2 2023 report. The company made a profit for Q2 and purchased 12,333 BTC. As of July 31, the company owns 152,800 BTC. The total BTC purchase price is $4.53 billion at an average price of $29,672 per 1 BTC.

Second – Fitch Ratings downgraded the U.S. sovereign credit rating from AAA to AA+ due to a growing budget deficit and a buildup of government debt. The downgrade had a limited impact on the markets. And since with such debt it is an expected event. U.S. government debt service has nearly reached $1 trillion a year. At this rate, debt interest payments will soon become a major spending item in the U.S. budget. Hardly anyone will repay the debt. The share of the dollar is declining in international settlements and in central bank reserves. No matter what anyone says, U.S. bonds are becoming toxic.

Analysis of other factors

Friday’s U.S. labor market data points to a continued slowdown in job growth. 187,000 jobs were created in July. And that is below forecasts. And the figures for June were revised downward to 185k. That’s the smallest job gain since December 2020.

Although the unemployment rate has fallen. And wages have risen, the low rate of job growth suggests the labor market is gradually cooling under the influence of the Fed’s tighter monetary policy and a slowing economy. Companies are cutting back on hiring because of rising costs and an uncertain outlook.

Overall, the data points to weakening employee attitudes and cooling labor demand. This could have a dampening effect on inflation and cause the Fed to slow the pace of rate hikes. Nevertheless, the labor market remains relatively resilient despite the slowdown.

Despite a relatively quiet week in terms of economic events, the key indicator will be the U.S. Consumer Price Index (CPI), which will be released on August 10. It will give an indication of the inflation rate and could affect the US Dollar’s performance and the Fed’s monetary policy expectations.

The dollar ended last week on a weak note after a five-day rally. And the question is whether it was a correction of the uptrend or the beginning of its reversal. Overall, the US inflation report will be a key benchmark in the coming week to understand the outlook for the dollar and monetary policy. Bitcoin did not take advantage of the dollar’s weakness, and that’s a bad thing, as its rebound and a decline in U.S. stock indices could bring down the market more.

Buyers’ activity in the crypto market is low due to fears of a new market crash

The U.S. Attorney’s Office is preparing charges against Binance. However, it fears that it may provoke a massive outflow of user funds, as in the case of the bankrupt FTX.

DOJ officials are rumored to be concerned that filing criminal fraud charges against Binance could cause panic. And mass withdrawals by customers, causing them to lose money and destabilize the entire cryptocurrency market.

Therefore, prosecutors are considering alternative options to punish Binance, such as fines, deferred prosecution, or a settlement agreement. This would avoid a harsh reaction from investors and negative consequences for the industry. A decision on what charges will ultimately be brought against Binance has not yet been made and is under review by the US Department of Justice.

Prospects

Our experts note that despite the local recovery, buyers failed to gain a strong foothold above $30 th. The price Bitcoin stabilized around $28,950, where it traded until the end of the week amid the absence of positive triggers. The key support level is the $28,250 mark. If the trend line from the low of $16,333 does not hold. The risks of falling to $25,250 will increase sharply. According to seasonal cycles, the bearish phase should last until September. BitRiver estimates that Bitcoin needs to break through the resistance at $30,500 for the situation to turn bullish.

Our experts have told us what events. And market factors could lead to the beginning of a more noticeable change in the price of Bitcoin

Bitcoin (BTC) exchange rate has been in the range of $29-31 thousand since the end of June. And in case of short-term price changes, it quickly returns to its previous values.

According to Glassnode, a huge number of Bitcoins changed hands in the range of $30,400 to $31,100. Due to this, the Bitcoin price has formed strong resistance levels that will not be broken without significant fundamental triggers in the next few days.

The current period of consolidation of the cryptocurrency price is primarily due to the market’s expectation regarding the denouement of the Bitcoin-ETF story. And uncertainty about the US Federal Reserve policy and interest rates.

On the one hand, based on the 30-day federal funds rate data, there is a 99.8 percent probability of a rate hike. And what is traditionally a bearish signal for the market. On the other hand, analysts are expecting very soft rhetoric from Jerome Powell regarding further rate hikes. And there is a probability that he will announce the current rate hike as the last one in this cycle. In that case, we can expect a bull rally for Bitcoin as well as other cryptocurrencies.

Also, anytime before August 12, we may get news on the SEC’s decision on Bitcoin-ETF applications by BlackRock and other investment funds. If the applications are approved, Bitcoin could “fly” to $35-40k. But if they are rejected or returned for revision, the price will most likely return to the $27-28k levels.

BTC exchange rate seems to have frozen up

The main reason Bitcoin is stagnating is the lack of bullish momentum. To overcome the $32.5k mark and consolidate above it. Now Bitcoin lacks the inflow of institutional money. And this inflow is hindered by the lack of clear and precise regulation.

Bitcoin’s noticeable growth stopped at the end of June. And since then, the main cryptocurrency has been hovering around $30 thousand for a whole month. This was the case until recently, when several notable events occurred in the crypto market. First, Ripple won a partial victory in court against the SEC. Second, there was the collapse of the dollar in the global currency market. All this, of course, affected the growth of interest in Bitcoin.

Today it continues to trade at the same level, but in the near future it will begin a steady, albeit small growth. Some analysts make predictions based on the 200-day moving average indicator (MACD). And they forecast its reaching the value of $32 th. at the moment of halving. Our experts think that this is quite a balanced position. And it is unlikely that by the halving the indicator will exceed this value by more than 50%. At this point, our experts see a price opportunity between $40k and $50k (most likely $47k).

The launch of the Bitcoin ETF could boost daily demand for bitcoins by $100 million, analysts predicted

The price of Bitcoin (BTC) can grow by 521% from current values to $180 thousand before the planned April 2024 halving. This is reported by Business Insider with reference to the data of the research company Fundstrat.

Now the daily demand for BTC in the amount of about $25 million is equivalent to the daily reward for mining in the amount of about $25 million. But the situation may change in the case of the launch of the Bitcoin-ETF, the analysts of the company believe.

In their opinion, Bitcoin funds can increase the daily demand for BTC by $100 million. Such growth taking into account the halving in April 2024. And which will reduce the daily reward for mining to $12 million. It means that the price of BTC must grow significantly for an equilibrium between buyers and sellers to be reached.

In July, NYDIG analysts said that spot Bitcoin-ETFs will provide demand for cryptocurrency for $30 billion. Experts came to this conclusion after the largest management companies submitted applications for the launch of such funds.

Our experts note that at the same time, Bloomberg senior analyst Eric Balchunas believes. That the approval of applications for the launch of spot exchange-traded BTC funds (ETFs) in the United States will open the bitcoin market access to capital of $ 30 trillion.

Our experts have analysed the market situation and outlined how it could change in the short term for Bitcoin

The week from 3 to 9 July was quite peaceful for the Bitcoin market. The price of the cryptocurrency fluctuated between $29,800 and $31,500. Significant volatility was seen on Monday (3 July) and Thursday (6 July). On these days, buyers tried to overcome the resistance level in the range of $31,400 to $31,500, but failed to succeed.

At the beginning of the week the price reached $31,380. However, due to the Independence Day celebrations in the USA on the 4th of July, a corrective movement was seen in all markets. Which lasted until the publication of the minutes of the US Federal Reserve (Fed) meeting. The correction of the BTC/USDt pair was temporary and the price recovered to $31,500 from $30,200.

The minutes of the Fed meeting showed that interest rates remained unchanged. But raised expectations of a possible increase at the next meeting. This was one of the reasons for Bitcoin’s price fluctuations.

The growth of the dollar index and the fall of stock indices forced many investors to close long positions due to concerns about the U.S. economy. A correction started from the $31,500 level. The US private sector employment report released by ADP. And showed a stronger increase in private sector jobs by 497 thousand in June than expected. The data indicated that the US labour market remains strong despite the Fed’s tightening of monetary policy. They raised investor concerns about a possible more aggressive tightening of the Fed’s monetary policy.

Opportunity for growth remains

The US Department of Labour reported that data on non-farm payrolls for June showed the addition of 209 thousand jobs. And while the forecast expected the addition of 225 thousand jobs. This led to the weakening of the US dollar. The unemployment rate was 3.6% compared to the previous reading of 3.7%. And average hourly earnings rose 4.4% year-on-year, up from 4.2% in the previous month, adding to inflationary pressures.

According to CME Group, there is a 93% chance of an interest rate hike of 25 basis points to 5.25-5.5%. A rate hike favours a stronger local currency. Given that the market has already taken this hike into account, we can expect the dollar to decline further after the announcement of the US Federal Reserve’s decision.

Next week, special attention will be paid to inflation indicators in the US after the publication of labour market data. The consumer price index (CPI) for June is expected to rise by 0.3% month-on-month. And the annualised rate is expected to fall from 4.0% to 3.1%. The core CPI is also expected to decline from 5.3% to 5.0%.
Our experts believe that there is still room for Bitcoin price to rise to the $34k level, which represents the target zone.

Our experts gave their opinion on the prospects for Bitcoin. And named key events for the market as well as predicted further movement of the exchange rate

On July 6, Bitcoin (BTC) momentarily reached $31,500. This was the first time since the beginning of the year. As of 16:30 Moscow time, bitcoin is trading at $31k.

Bitcoin crossed the $31K mark half a month ago, and since then, its price has not declined significantly. There is every reason to believe that it will only grow further. The situation on the crypto market now is extremely favorable.

The US Federal Reserve is talking about the possibility of using payment stackcoins as money in the future. Deutsche Bank, Citadel, Fidelity and several other financial giants have entered the crypto market. And by launching their own decentralised crypto exchange, EDX Markets. The number of applications to launch bitcoin-ETFs for the spot market is growing: BlackRock and Invesco are now interested.

Our experts believe that all cryptocurrencies will grow significantly in popularity in the near to medium term. Bitcoin, on the other hand, will aim for $35,000. This threshold, it may cross already in autumn. If no shocks occur, the next bar for it is $40 thousand.

The data that almost all of the company’s ETF applications have been approved by the US regulators also adds to the positive. That is, the chances that we will see a spot bitcoin ETF on the market in the near future are increasing significantly. The launch of such a fund will attract additional capital to the crypto market from institutional investors, which will lead to an increase in the BTC exchange rate.

Bitcoin could exceed $125,000 in 1.5 years, analysts suggest, based on past signals

The head of research and strategy at cryptocurrency marketplace Matrixport, Marcus Thielen, predicted. That Bitcoin could surpass $125k by 2025. According to historical data, the reversal to a multi-month rally is off to a good start. And once prices reach a yearly high, thereby confirming the end of the bearish cycle.

The signal was formed at the end of last June, when the exchange rate of BTC exceeded $31k. Earlier impulses were recorded in August 2012, December 2015. And in May 2019 and August 2020, preceding the first cryptocurrency’s active rate hike.

Given the data on the asset’s yields from the most important marks during these periods, Thielen speculated. That over the next 12 months the value of the coin will rise by 123%, to $65,539, and over 1.5 years will increase by 310%, to $125,731.

On the day of July 6, Bitcoin price momentarily reached $31,500, the first time this has happened since the beginning of the year. VTS has risen by more than 3% overnight and by almost 90% since January 1.

Our experts note that the price of some other cryptocurrencies rose after Bitcoin. Solana (SOL) was among the leaders of the day, rising 5.7% to $20.18. Bitcoin Cash also continued to grow markedly.

Our experts tell us what we need to know about Bitcoin halving. As well as when to expect it, and what impact it may have on crypto market

The fourth Bitcoin halving is about a year away. This event occurs every four years and historically serves as a bullish catalyst for Bitcoin’s price rise and popularity.

Halving is a planned reduction in the number of newly issued BTCs. Which are created and distributed to miners who perform transaction verification and validation on the network. This is embedded in Bitcoin’s software code to ensure that the total number of coins in the network never exceeds 21 million units.

Halving first took place in November 2012, when the reward per block was reduced from 50 BTC to 25 BTC. The second reduction occurred in July 2016, when the reward dropped from 25 BTC to 12.5 BTC. The third and final halving occurred in May 2020, when the reward dropped from 12.5 to 6.25 BTC.

The next Bitcoin halving is expected in April 2024. The reward per block will be reduced to 3.125 BTC, reducing Bitcoin’s annual inflation rate from 1.7% to 0.8%. The final halving will occur in 2140, when the last Bitcoin will be mined. And the total supply of coins will reach 21 million.

Bitcoin’s monetary policy is unique compared to most other crypto-assets, which tend to have inflation. Dogecoin (DOGE) has 2-3% inflation. And Solana (SOL) has long-term inflation of 1.5%. Ethereum has had a negative inflation rate since the blockchain switched to the Proof-of-Stake (PoS) algorithm. As the volume of transaction fees burned on the network exceeded the volume of newly issued ETH coins. Halving occurs not only in Bitcoin, but also in other Proof-of-Work (PoW) cryptocurrencies, such as Litecoin (LTC) or Zcash (ZEC).

Profits of miners

Now the main part of the miners’ profits comes from the distribution of rewards for a found block of bitcoin (newly mined bitcoin). And at which 6.25 BTC is paid out to miners about every 10 minutes. The annual issuance of new Bitcoins creates about $9.8 billion, creating additional selling pressure. Which the market is forced to absorb every year.

Despite the fact that the number of new Bitcoins mined per block is halved. The cumulative income of miners after each halving increased. This is due to the rise in the price of BTC. But when the number of new Bitcoins mined in each block approaches zero.Then miners will no longer be able to rely on rising prices to cover costs.

In addition to newly issued Bitcoins, miners also receive income in the form of transaction fees. It can be assumed that the commissions for this should increase. At the same time compensating miners for the decreasing income from the issuance of new Bitcoins. Right now transaction fees are only 2.6% of miners’ income as a percentage of the total reward per block found.

This year has seen an upward trend in transaction fees. This is largely due to the emergence and popularization of so-called ordinals or BRC20-tokens. These are analogous to NFT in the Bitcoin blockchain, which require space in a block. New experiments with second-tier technologies such as the Lightning payment network or the Stacks smart contract platform. So too could further increase the strain on the blockchain.

If transaction fees don’t rise appreciably. Or miners fail to find alternative sources of income. Then Bitcoin’s long-term viability could be in question. And subsequent halving will put additional pressure on miners.

How Halving will affect the price

If you estimate the price dynamics in three Bitcoin halving cycles over a two-year period. And beginning one year before each halving and ending one year after it, one can get an idea of Bitcoin’s price trajectory as the fourth halving approaches. Over such a two-year period in 2012, Bitcoin gained about 30,000%. And in 2016, 786%, and in 2020, 712%. If Bitcoin performs as well as in the last two periods, its price could reach the $220,000 mark in 2025.

However, past performance is no guarantee of future results. And there are many other factors influencing Bitcoin’s price. Moreover, as Bitcoin develops and becomes more widespread over time, its price may become less volatile and more stable.

Another expectation of halving is less pressure on the price due to sales, especially from miners. Miners are the most predictable sellers of Bitcoin. That’s because they need to cover the cost of maintaining operations by converting new Bitcoins into fiat money. With each halving, the structural pressure to sell decreases. And assuming demand stays the same or goes up, the resulting price should also go up.

Our experts have analyzed the situation on crypto market. And told how it can change for Bitcoin in the short term

Last week started not the best for Bitcoin. When against the background of weak Chinese statistics and the fall of the S&P500 index, the pair BTC/USDt fell to $27,666. It seemed that the situation would only worsen, but since May 2, the phase of recovery began thanks to the fall of the dollar index. And support from the U.S. Treasury Secretary Janet Yellen. Bitcoin has risen to $28,879.

However, there are still dangers to the U.S. economy. If Congress does not approve an increase in the national debt ceiling, the government will not be able to borrow additional funds. And it could find itself in a very difficult position. Since 1980, the U.S. government has shut down several times due to the inability to raise the national debt ceiling. Including closures in 1990, 1995-1996, 2013 and 2018-2019. Democrats and Republicans aren’t particularly worried about this.

After the publication of data on the labor market in the United States on May 4, the pair BTC/USDt rose to $29,677. However, investors remain generally quiet as buying activity in the cryptocurrency remained low.

The scenario of continuation of sideways movement on cyclic analysis is still confirmed. The beginning of a new rally on it falls on June 1.

According to BitRiver estimates, buyers have to fight for the level of $31,000. They need to pass it to make the price pattern on the daily timeframe “bullish”. Otherwise, the scales will start tipping to the sellers’ side.

Our experts told us how the banking crisis in the U.S. affects the prices of cryptocurrencies. And why they are perceived as an alternative investment asset amid uncertainty.

On Monday, May 1, regulators closed the troubled American bank First Republic. The bank went under the external management of the U.S. Federal Deposit Insurance Corporation (FDIC). The collapse of First Republic set another anti-record. This bank was the third largest of the collapsed financial companies since the 2008 crisis.

At the opening of trading on May 2, shares of three more American banks – PacWest Bancorp, Western Alliance and Metropolitan – collapsed by almost 30%. Because of the volatility, exchanges suspended trading in shares of all three financial institutions. At the same time, bitcoin gained 2% in price, rising to $28.5 thousand after its recent fall.

Banking crisis is just starting

The banking crisis has not yet shown itself on the world stage. But the fact that regulators have to figure out how to put out the blazing fire is evident in their comments, according to our experts.

In general, the banking crisis as a crisis of confidence in the banking system helps cryptocurrencies. But it would be too reckless to expect such a straightforward correlation, our experts say. Bitcoin exchange rate, takes into account other factors. For example, regulatory uncertainty, the state of financial stability or problems of stabelcoin issuers. It also takes into account inflation, approaching halving or expiration of Bitcoin futures contracts.

In the last week of April, bitcoin’s price rose on the back of First Republic’s problems. When there was still no news of its final collapse. However, cryptocurrency trading was quite unstable. Because in addition to the impact of the banking crisis on the cryptocurrency rate, investors were guided by the inflation figures. And also on the policy of the U.S. Federal Reserve (Fed), the possibility of recession and the weakening of the dollar.

First Republic became the fourth U.S. bank to collapse this year. Silvergate and Signature closed in March. Which largely focused on crypto-industry customers. And also Silicon Valley Bank, the collapse of which also hit the rate of the second most capitalized USD Coin (USDC) stabelcoin. If in the case of the first two there was a clearly visible dependence on the crypto market. First Republic Bank seems to have collapsed without any connection to digital assets. According to reports studied by journalists of specialized publications, the bank lacked any cryptocurrency capital.

Linking the U.S. banking crisis to the rise of Bitcoin

The link between the U.S. banking crisis and the rise of Bitcoin is that both events are indicative of the instability of the banking system. And they are alarming for investors. Cryptocurrencies act as an alternative investment asset that is not subject to control by central banks and does not depend on financial institutions. The collapse of banks could increase interest in cryptocurrencies. As many people are looking for safe places to invest in times of economic instability, our experts believe.

As banks face insolvency, their depositors try to withdraw money from their deposits en masse. Any collapse provokes the depositors to withdraw money from other banks as well. Which also run the risk of liquidity shortages. As long as the money is in the bank, the bank actually owns it. Cryptocurrencies, on the other hand, give a tool for owning value with full control of its owner.

However, we should not forget that the cryptocurrency market is also subject to fluctuations and instability. Especially in light of strict regulation by governments and central banks. In addition, cryptocurrencies can be subject to fraud and cyberattacks. And this can cause investors to lose money. Thus, any investment, including cryptocurrencies, should be made after careful risk analysis.

Our experts told us what factors affect the Bitcoin price. And what dynamics can be expected from it in May

Bitcoin and other cryptocurrencies historically have not maintained the classic “sell in may and go away” trend. Only four times in the last ten years has Bitcoin fallen in May. And the average decline has been lower than the increase in May of other years. This suggests that it is not statistically correct to expect cryptocurrency prices to fall in May. However, this does not mean that the market cannot decline.

At the beginning of the month, we are waiting for the Fed meeting, which will decide on the interest rate and further steps to change monetary policy (MP). Market expectations lay another 0.25% hike and a pause in rate hikes thereafter.

Some analysts believe the Fed could begin loosening monetary policy. Especially in view of recession risks and developing problems in the banking sector. At the same time, if by the results of the FRS meeting on May 3 the Open Market Committee will not designate the prospect of transition to easing of the monetary policy. It will create pressure on both stock markets and cryptocurrencies.

Our experts do not expect crypto-asset prices to rise significantly in May. And continue to wait for major bull events in the crypto market in the third and fourth quarters of this year. An ideal scenario in May would be Bitcoin’s correction to the $25K level. That decline would have provided an opportunity to enter the market at bargain prices in anticipation of further growth.

Fed plans could send signals to investors

The cryptocurrency market continues to be influenced by the dynamics of U.S. stock indices, the dollar index, the actions of the U.S. Federal Reserve. As well as news on the U.S. debt ceiling.

The volume of the U.S. national debt has already reached too much. And the issue of its repayment becomes more and more urgent. This could lead to a change in U.S. economic policy, including the Fed’s monetary policy.

The Fed meeting could be a key moment for the cryptocurrency market. As Jerome Powell’s speech will affect both the dollar exchange rate and the demand for cryptocurrencies. A rate hike, which is likely during the meeting, has already been factored in by the market. But further Fed plans could give new signals to investors. The trading price regime could be adjusted after Powell’s speech. And assessment of the latest news on US GDP and government debt. To account for changes in economic policy and make a decision to buy or sell cryptocurrency.

According to the latest CME Group data, there is an 82.8% chance of a rate hike to 5.25% at the May meeting. On April 27, the U.S. Commerce Department’s Bureau of Economic Analysis released GDP data. The U.S. economy grew 1.1% year on year in the first quarter against the previous value of 2.6%. Economists had expected growth of 2.0%. The economic growth slowdown may change Jerome Powell’s rhetoric and the Fed will end its rate hike cycle at the June 14 meeting to prevent a recession.

BTC/USD is trading at $28+k. We might predict a trading price range of $26.5-31k for May. Our experts think that the price will stay in that range not only till the Fed meeting. But also for some time and will leave it after June 1, 2023. If suddenly the news background will form in such a way that the buyers will be able to pass the level of $31 th. Then there will be a level of $35k on horizon. Decrease in price below $26.5k will lead to Bitcoin falling to $25k.