April 19, 2024
From bullish highs to regulatory challenges, Bitcoin's volatile journey unfolds
Bitcoin News

Bitcoin’s Bullish Momentum Fades with a 9.4% Loss in Six Months

The bullish momentum that drove Bitcoin to a year-to-date gain of 66.1% has nearly disappeared, with Bitcoin losing 9.4% over the past six months. Bitcoin’s price had appeared to maintain its bullish momentum following the Grayscale Court victory against the SEC. However, these gains have completely evaporated as the losing streak that started in September has extended into October.

The decline in Bitcoin’s price has led some analysts to draw comparisons between the current BTC market and the pre-bull market cycle of 2015–2017, with $28,000 emerging as a significant resistance level. At the beginning of 2023, traders with short positions were consistently dominating liquidations in the futures market. The Bulls were caught off guard on August 17th when a flash crash resulted in the liquidation of over $213.5 million worth of long positions. This marked the largest single-day liquidation of Bitcoin long positions since the Terra Luna collapse in May 2022.

Since the flash crash, there has been a continuous outflow of capital from risky assets like Bitcoin. Options volume has declined by 40% as of October 9th. The absence of consistent liquidity and trading volume has led some analysts to characterize Bitcoin’s price behavior as illiquid and choppy. Despite short-term uncertainties in the crypto market, institutional investors do not appear to have altered their long-term outlook. Despite a challenging U.S. regulatory environment, large institutions are actively advocating for Bitcoin financial instruments, potentially triggering a bull run. Currently, nine top investment firms have ETF applications pending with the SEC.

However, despite the urgency of major financial institutions, it appears that the SEC is inclined to continue delaying decisions on approving Bitcoin ETFs, including BlackRock’s application, until 2024. This ongoing delay could continue to negatively impact investor sentiment and price action in the crypto market.

While some investors have speculated that BlackRock may be exerting pressure on Bitcoin’s price in anticipation of their eventual ETF launch, this argument seems unlikely as they have more to lose from a BTC price crash. Bitcoin’s price remains susceptible to the influence of macroeconomic events, and it is probable that further developments in the conflict between Israel and Hamas, regulatory actions, and interest rate hikes will continue to affect BTC’s price.

Shortly after the conflict between Russia and Ukraine began, Bitcoin’s price experienced an 8% drop. Although this decline was quickly reversed, investors may anticipate ongoing volatility driven by conflicts. In the long term, market participants still anticipate a recovery in Bitcoin’s price, particularly as more financial institutions appear to be embracing BTC.

Image by pixabay

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