3 reasons why Bitcoin is struggling to turn $ 20K into support
The positive gains recorded in the first ten days of July have almost disappeared on July 13 when Bitcoin (BTC) and the broader market slid back to new annual lows.
Subdued market action can be traced back to a number of factors, ranging from today’s record high consumer price index printing and a furious US dollar that recently reached its highest level since October 2002.
Data from Cointelegraph Markets Pro and TradingView show that July 13 marked the fifth day in a row with a falling BTC price, which reached a low during the day of $ 18,910, after the declines across the major stock market indices.
While the world is waiting for a catalyst that can bring positive momentum back to global financial markets, here’s what several analysts have to say about what’s next for Bitcoin.
Was Bitcoin’s last increase a result of the laundry trade?
Bitcoin’s gains over the past week had triggered a new wave of optimism for some traders, but that optimism is likely to wane in the near future. Data from Arcane Research shows that a majority of the momentum came from the removal of trading fees for certain Bitcoin pairs on the Binance cryptocurrency exchange.
According to Arcane Research, after the fee was removed, trading volumes on the stock exchange increased, and this can most likely be attributed to “laundry trading from traders who want to take advantage of fee removal to reach higher fee levels.”
However, when looking at the crypto exchange ecosystem as a whole, activity remains subdued, indicating reduced interest in buying cryptocurrencies at the moment.
Arcane Research said,
“All other exchanges saw subdued trading volume last week, with a seven-day average trading volume at near 1-year lows, illustrating that the organic trading activity in the market is very subdued at the moment.”
Extreme fear persists
Further evidence highlighting the lack of interest in buying Bitcoin can be found from the Crypto Fear and Greed Index, which is currently experiencing a “record-breaking 68-day series” in the extremely dreaded territory.
As noted by Arcane Research, the peak of a score of 24 on July 10 was largely influenced by Binance’s decision to remove trading fees, which “led the calculation to overestimate the current fear of market sentiment.”
After the news of free Bitcoin trading on the top exchange subsided and volumes returned to normal, the Fear and Greed index has fallen back to the extreme fear zone.
Currency flows provide further evidence of the state of the market. Following the liquidation of Three Arrows Capital and the freezing of funds on platforms such as Celsius, the rate at which users have withdrawn BTC from stock exchanges reached its highest level ever on 26 June.
Since the beginning of 2020, BTC outflows from stock exchanges have far exceeded BTC inflows, with a sharp increase between June and July 2022.
On June 26, we saw the largest outflow of BTC, with 153,000 BTC (worth about $ 3.2 billion) rushing out of centralized exchanges. pic.twitter.com/FQp2E2YkSw
– Delphi Digital (@Delphi_Digital) July 12, 2022
Related: 3 key figures suggest that Bitcoin and the broader cryptocurrency market must fall further
Leveraged liquidity increases over $ 25,000
A final bit of insight into the factors that hold Bitcoin in its current trading area was offered by researchers at Jarvis Labs, who provided the following chart showing the dark liquidity bands that exist below $ 18,000 and above $ 25,000.
According to Jarvis Labs, the appearance of highly leveraged liquidity signaled the possibility that BTC could run for 25,000 dollars, except for unforeseen negative developments.
Jarvis Labs said,
“The proviso here is that for the price to threaten that level, no more skeletons can be exposed in the cryptocurrency market, otherwise more forced sales can be triggered.”
Although it remains to be seen which way the price of BTC will move, the one thing traders should be preparing for is the potential for increased volatility in the months ahead as rising global tensions, rising inflation and widespread pessimism suggest that the crypto market and the rest of the world may have an expanded bear market.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trade involves risk, you should conduct your own research when making a decision.
