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Why is BTC stuck below $58,000?
The price of Bitcoin has been stuck below $58,000 for a long time. Despite being in a bull market, Bitcoin is not moving higher, and both market and non-market factors are to blame.
Impact of the US Consumer Price Index
THE US Consumer Price Index (CPI) rose 3% in June. Analysts see this as a bullish signal for Bitcoin, but the price is not rising. If the U.S. central bank cuts interest rates, incentives for fixed income investments will decrease and people will look for investments with higher returns.
Chris Larkin, managing director of trading and investments at E-Trade, told CNBC that the Federal Reserve (Fed) is “one step closer to a rate cut in September,” especially after real average hourly earnings for workers slowed by 3.9% from a year earlier.
The labor force participation rate also increased slightly, from 62.5% in May to 62.6% in June. Despite data indicating a higher likelihood of rate cuts, with 90% consensus for at least a 0.25% rate cut by September, the price of Bitcoin remains below $60,000. Meanwhile, the S&P 500 stock index is 0.5% below its all-time high and gold is trading 1.2% below its all-time high of $2,450 from May 2024. The Russell 2000 small-cap index, which excludes the 1,000 largest U.S.-listed companies, also rose 3% on July 11.
German Government BTC Sales
The German government continues to release nearly 50,000 bitcoins, seized in 2013. These are worth nearly $3 billion. According to Watcher Guru, the German government has only $285 million left in BTC.
Price Analysis
Due to these issues, the market looks like a bear market despite being in a bull market. BTC is currently trading at $57,412, with an RSI value of 48.30. The Bitcoin chart shows a major rejection at $59,500, a strong resistance zone where the MA100 is also located. This 3.87% drop has pushed BTC back into the triangle zone, indicating that the bears are currently holding a strong base.
Source: TradingView
Bitcoin’s market cap has fallen to $1.1 trillion, which has investors worried. Sources suggest that as retail investors face selling pressureBTC whales and sharks are piling in. Once the German government finishes selling their BTC and Mt. Gox’s redemption pressure eases, the market may stabilize. It may take another 1-2 months for everything to settle down.
Read also: Major Mid-Cap Altcoins Double as Crypto Market Rebounds!