The bullish momentum that propelled Bitcoin (BTC) to a 76% year-to-date gain has all but vanished this week as Bitcoin price slid 3.6% in the previous 30-days. Bitcoin price briefly flashed some strength, rallying to $29,600 on Aug. 14 but it was unable to reach $30,000 and remains below that key resistance level.
The contraction and low volatility in Bitcoin price have some analysts comparing the current BTC market to the pre-bull cycle of 2015-2017.
Let’s take a closer look at the factors impacting Bitcoin price today.
Bitcoin’s market structure contracts
Bitcoin’s market structure had been recovering since the start of 2023, but its recent price action has turned the market structure bearish and is now considered to be contracting, according to the Capriole Bitcoin Macro Index.
Despite Bitcoin price technically contracting, independent market analyst Charles Edwards still sees the $30,000 level as crucial,
“While we are still in a technical bearish breakdown from $30K, the lack of a downward follow through in Bitcoin’s price is somewhat promising. The reason being, if the price was going to collapse, we would usually have seen that follow through by now. Nonetheless, a close back above $30K on the daily timeframe is required at the minimum as a technical confirmation of a failed breakdown. When that happens, we would consider that quite bullish.”
Bitcoin investor sentiment stalls
The start of 2023 saw shorts continually dominating liquidations in the futures market. Since Aug. 12, the trend has shifted with Bitcoin long liquidations dominating 83% of all BTC liquidations on Aug. 15. When BTC longs are liquidated without buy pressure from trading volume, Bitcoin price is negatively affected. Bitcoin volume has also hit the lowest levels since early 2021.
Related: ‘Elegant and ass-backward’: Jameson Lopp’s first impression of Bitcoin
The absence of new volume has sent the Fear and Greed Index, a key investor sentiment gauge, into a downslide in the last 30-days and is flirting with a switch to fear.
The short-term uncertainty in the crypto market does not appear to have changed institutional investors’ long-term outlook. Despite a hostile U.S. regulatory environment, large institutions are pushing for Bitcoin financial instruments which may spark a bull run. Grayscale directly urged the SEC to approve all Bitcoin ETFs.
Despite the urgency of major financial firms, the SEC seems poised to continue to delay decisions on approving Bitcoin ETFs until 2024 and this could be negatively impacting investor sentiment and price action across the crypto market.
Related: Bitcoin speculators now own the least BTC since $69K all-time highs
Will short term pain in macro lead to long-term gains in crypto?
Bitcoin price continues to be directly impacted by macroeconomic events, and it is also likely that further regulatory actions and interest rate hikes will continue having some effect on BTC price. The recent CPI print and upcoming FOMC minutes on Aug. 16 may give insight into whether the Federal Reserve will continue with aggressive interest rate policies.
Zachary Townsend, CEO of Meanwhile, provided insight into how macro events can impact the current Bitcoin price action,
“I think this lower-than-expected CPI print last week came as a bit of a surprise given that energy prices have been experiencing an uptick of late, notably because of all the summer travel and associated demand that comes with this. But the fact that prices are still falling suggests to me that the Fed could soon switch from hiking rates to being more concerned about economic growth, especially if the latter starts showing signs of slowing. We could be seeing rate cuts sooner than expected. This of course would be a positive for Bitcoin and other risk assets.”
In the long term, market participants still expect the price of Bitcoin to recover, especially as more financial institutions are seemingly embracing BTC.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.