The current price of Bitcoin is $27400. On October 5th, the price broke through $28000, but then fell again
The current price of Bitcoin is $27400. On October 5th, the price broke through $28000, but then fell again. Despite this volatility, investors have not completely lost hope. So why can't BTC prices continue to rise?
Why hasn't cryptocurrency risen?
At the beginning of this week, BTC prices climbed to $28600, an increase of over 5%. However, when the Ethereum Futures ETF closed with a trading volume of $2 million on the day of its launch, market sentiment reversed. This actually indicates the degree of weakness in market risk appetite. If BTCETF is approved, will the same thing happen? Investors are starting to ask this question.
There are three main reasons why prices are difficult to recover.
Macroeconomics
On October 2nd, the Federal Reserve announced that he expects the economy to slow down due to high interest rates. He also emphasized that the effectiveness of the current policy has not yet been fully demonstrated.
With the statements of several other committee members, the expectation of a rate cut on November 1st has rapidly skyrocketed. On October 3, the real yield of the US 10-year treasury bond bonds after deducting inflation factors reached a 15 year high of 2.47%. This development has led to the US dollar index (DXY) reaching its highest level in 10 months.
Compared to the spot market, the monthly trading price of Bitcoin futures contracts usually has a slight premium, indicating that sellers are requesting more funds to delay settlement. Therefore, the annual premium for BTC futures contracts is usually 5-10%. This situation is also true for other markets, known as futures premiums.
The BTC futures premium continues to fall below the neutral threshold of 5% and is showing a downward trend. This situation indicates insufficient demand in the futures market.
On the other hand, the trading volume in the spot market has dropped to a low point in 2020. Major US market makers such as JaneStreetGroup and JumpTrading began withdrawing from the market before May, leading to a contraction in trading volume. When you look at the monthly chart and check the trading volume power, you can clearly see this.
Market makers have stated that they have withdrawn from the market due to regulatory uncertainty, but rumors of Jump's involvement in some insider trading have been circulating on social media for a long time.
Spot Bitcoin ETF
One of the factors supporting Bitcoin's 68% increase in 2023 is the expectation that Bitcoin spot ETFs will receive approval from the US Securities and Exchange Commission. However, due to recent delays, the idea that spot ETFs will not be approved in 2023 has been accepted.
On the other hand, the trading volume of ETHETF on Monday was completely disappointing. From a broader perspective, even if the spot BTCETF is approved, this apathy may continue.
In addition, despite the court's positive ruling to convert grayscale Bitcoin trust funds into spot Bitcoin ETFs, the negative premium remains as high as 19%. If investors have hope for the GBTC conversion, they will quickly buy and reduce the negative premium to a neutral level, knowing that they will receive over 19% of the return after the conversion.
October 10th is the last day for the SEC to appeal against the GBTC decision, and so far they have not appealed. They stated that they are still reviewing the decision. If they cannot find other excuses, they may approve the conversion.
In summary, due to these short-term negative factors, Bitcoin prices may not be able to maintain above the resistance zone of $28500.
If the Federal Reserve believes it will mess up in the near future and start easing early, if the Securities and Exchange Commission abandons stubbornness, if the market regains trust and institutional/individual investors return, we may see the painful bear market come to an end. End. Unfortunately, this is the current situation.
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