In the recent past, the epitome of digital currency, Bitcoin, has been riding a low curve, experiencing a subtle July, diverging from its characteristic volatility. Currently, Bitcoin hovers around $29,300, exhibiting an approximated 8% decline compared to the annual highs of $31,800 notched previously this month. Despite this dip, Bitcoin is holding strong, maintaining above its 50-Day Moving Average (DMA).
However, some factors suggest that the possibility of experiencing a further blot of minor near-term downside potentially lies ahead. Stipulating that Bitcoin plummets into the $28,000s bracket would lead to a collision with a noteworthy long-term support zone revolving around $28,500. This pertains to where the late May high, 100DMA and the 2023 uptrend converge, regarded by technicians as a substantial risk-reward area intended for potentially extending long positions.
To complement the seemingly bullish technical attributes, fundamental factors seem to support the hypothesis of a bounce back for Bitcoin within the $28,000s, with leeway for recovery to reach fresh annual highs. The prospects of Bitcoin Spot ETF are optimistic, although it might be an extended period until the US Securities and Exchange Commission (SEC) imparts decisions on Spot Bitcoin ETF applications.
BlackRock, the world’s largest asset manager, and other substantial names like Fidelity, vying for involvement in Bitcoin, infers a significant shift towards substantial institutional adoption, notwithstanding previous rejections of all spot Bitcoin ETF applications by SEC.
Additionally, the progressing scenario of the US economy nuances towards a “goldilocks scenario”, where inflation is lowering towards the Federal Reserve’s target while the US economy remains rigid. This, in turn, is exceedingly advantageous for risk assets, such as US stocks, which have maintained a historic positive correlation with Bitcoin. If the US stocks continue their rally, it could steer the latter with considerable tailwinds.
However, it’s notable that Bitcoin, which saw a powerful hike in March due to safe-haven demand amidst bank crisis apprehensions, may experience a decline in such demand. Investors who initially acquired Bitcoin as a safeguard against a potential banking crisis might contemplate profit-taking.
Even though macro is currently less of a challenge as compared to 2022, and optimism for institutional adoption is escalating, there’s no assurance Bitcoin will find the support it needs at the mid-$28,000s. Yet, the possibility of Bitcoin experiencing an essential bounce remains present, and things are looking promising for Bitcoin as it awaits the 2024 halving. Assuming 2024 repeats the precedent, we could witness Bitcoin price in the $100,000s by this time next year.
Source: Cryptonews
