Bitcoin
Why did BTC drop below $58K?
Bitcoin price has been stuck below $58,000 for a long time. Despite being in a bull market, Bitcoin is not moving higher, and both market and non-market factors are to blame.
US CPI Impact
The US Consumer Price Index (CPI) rose 3% in June. Analysts see this as a bullish sign for Bitcoin, but the price is not rising. If the US central bank cuts interest rates, the incentives for fixed-income investments will decrease, and people will seek investments with higher returns.
Chris Larkin, managing director of trading and investment at E-Trade, told CNBC that the Federal Reserve is “one step closer to a September rate cut,” especially after workers’ real average hourly earnings fell 3.9% from a year ago.
The labor force participation rate also increased slightly, from 62.5% in May to 62.6% in June. Despite the data pointing to a higher chance of rate cuts, with a 90% consensus for at least a 0.25% rate cut by September, Bitcoin’s price remains below $60,000. Meanwhile, the S&P 500 stock market index is 0.5% below its all-time high, and gold is trading 1.2% below its May 2024 record high of $2,450. Even the Russell 2000 small-cap index, which excludes the 1,000 largest U.S.-listed companies, is up 3% on July 11.
German government BTC sales
The German government continues to dump nearly 50,000 bitcoins, seized in 2013, onto the market. They are worth nearly $3 billion. According to Watcher Guru, the German government now has just $285 million worth of BTC remaining.
Source: X (old Twitter)
Price analysis
Due to these issues, the market looks like a bear market despite being in a bull market. BTC is currently trading at $57,412 with an RSI value of 48.30. The Bitcoin chart shows a major rejection at $59,500, a strong resistance zone where the MA100 is also located. This 3.87% drop has pushed BTC back into the triangle zone, indicating that the bears are currently holding a strong base.
Source: TradingView
Bitcoin’s market cap has fallen to $1.1 trillion, causing investors to worry. Sources suggest that while retail investors face selling pressureBTC whales and sharks are accumulating. Once the German government finishes selling its BTC and the pressure to pay out from Mt. Gox eases, the market may stabilize. It may take another 1-2 months for everything to settle down.