The price of Bitcoin (BTC) has been experiencing fluctuations within a narrow trading range for several days, and this trend continues on August 2nd. The price of Bitcoin fell nearly 1% to around $29,500 on this day. However, this downward movement is part of a flat market trend that has been ongoing for the past week, with the price trading within the range of $28,850 to $29,660.
One of the factors influencing this sideways trend is the recent drop in Bitcoin’s price, where it fell 4% below $30,000. This drop was primarily caused by the Federal Reserve’s decision to hike interest rates. Historically, rate increases have had a bearish effect on non-yielding cryptocurrencies like Bitcoin.
Furthermore, the struggle to stay above $30,000 can be attributed to broader market risks. Regulatory uncertainty surrounding Binance, the world’s largest crypto exchange by volume, and a recent DeFi exploit that cost $47 million have contributed to this struggle.
In addition to these market factors, there has been a decline in institutional interest in Bitcoin. CoinShares’ weekly report states that investors withdrew approximately $19.4 million from Bitcoin-based investment funds in the week ending July 28th. The majority of these outflows, about 93%, were from long-Bitcoin investment products, while short-Bitcoin saw its 14th consecutive week of outflows totaling $3.1 million.
However, despite the decrease in institutional interest, the overall sentiment for Bitcoin remains supportive. Investors have been taking profits in recent weeks, but the technical indicators suggest that Bitcoin is still in a positive position.
From a technical standpoint, Bitcoin is currently holding above its 50-day exponential moving average (50-day EMA) and is aiming to close above the $30,000 resistance level. If the price successfully breaks above $30,000, there is a high likelihood of a rally towards $31,500, which is positioned as a local peak level for the month of August.
This upside target remains valid as long as Bitcoin price remains above its multi-month ascending trendline support. However, if the price decisively breaks below the 50-day EMA and the ascending trendline, there is a risk of a significant crash towards the 200-day EMA, which is near $27,000. This level previously served as support during the March-April session earlier this year.
As the Bitcoin market continues to experience a sideways trend, influenced by various market factors and a decrease in institutional interest, it is crucial for traders and investors to closely monitor the technical indicators. The ability of the price to break above $30,000 and maintain support above key moving averages will determine the potential for a rally or a further downward movement in the coming weeks. Furthermore, regulatory developments and market risks, such as the ongoing concerns surrounding Binance, will also play a significant role in shaping the future of the Bitcoin market.