Bitcoin Price at Crucial Juncture: Bulls and Bears Vie for Control
Bitcoin’s price remains in a precarious situation, with neither the bulls nor bears able to dominate. Although the bears believe they can push the price below $25,000 due to a perceived head and shoulders (H&S) pattern, the bulls are struggling to invalidate this thesis.
The bulls want to prevent a daily close of Bitcoin above $27,550 while fighting to break the H&S neckline to confirm the pattern’s invalidation.
However, several market forces are making things difficult for both bulls and bears. First, US institutional investors’ BTC holdings have declined in recent months, according to analysts at CryptoQuant. The decline could limit the Bitcoin price rise due to the uncertain regulatory environment and Operation Choke Point 2.0.
Second, the total supply of stablecoins, which indicates the buying capacity in the crypto market, has decreased. It peaked at $99 billion in February 2022 and now stands at $71.1 billion.
Third, crypto market analysts claim that there is a lack of “new smart money players” brought on by supply and demand factors and the macroeconomic climate, including tight monetary policies by the US and European central banks and fears of a recession.
Another key inhibitor is the net dollar liquidity in financial markets, which has returned to end-March levels. Analysts believe that the fair value for Bitcoin is between $27,500 and $28,000.
Additionally, the short-term rally to $30,000 could face challenges due to declining market liquidity after Jane Street and Jump stopped their market-making activities in the US.
To gain momentum towards the rally, Bitcoin needs rising spot interest, positive feedback loops, and a favourable funding rate calculation. At press time, the Bitcoin price stood at $27,071 and was rejected on the first attempt to break the neckline of the H&S pattern.
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