Although the biggest cryptocurrency by market capitalization, BTC, which was trading at $27,729, increased by 5.5% throughout the day to $28,600, it lost momentum due to the much awaited Ether debut.
Exchange-traded funds (ETFs) for ETH $1,634 futures did not produce appreciable trading volumes.
Although investors were probably encouraged by the recent advance into the top end of the current price range, recent remarks from US Federal Reserve officials reaffirmed worries about an imminent economic slump.
3 Reason for why Bitcoin isn’t rising beyond $28.5K,3 Reason for why Bitcoin isn’t rising beyond $28.5K
With support at $27,200 on October 3 and a subsequent spike above $27,500 on October 5, Bitcoin showed short-term strength. Still, three important trade indices point to a poor degree of support. These measures include confidence in the approval of a spot Bitcoin ETF, derivatives, and spot market volumes.
1. The price of Bitcoin is being pressured downward by macroeconomic factors.
Vice Chair of the U.S. Federal Reserve’s Supervision Committee Michael Barr said in New York on October 2 that he expects economic growth to fall “below its potential” because of increased interest rates limiting economic activity.
Additionally, he pointed out that the present monetary policy’s full effects are still being felt. The market is presently equally split on whether the Fed will raise interest rates again in 2023, according to the CME FedWatch tool.
According to statistics from the U.S. Treasury Department, on October 3, the real yield on U.S. 10-year Treasurys, a measure that accounts for inflation, hit 2.47%, the highest level in over 15 years. The U.S. Dollar Index (DXY) hit its highest level in ten months, which is partially explained by this event.
Furthermore, according to Reuters, the United States has developed into a comparatively more desirable location for investments because of its “resilient economy,” which has better growth prospects than those of China and Europe.
2. Bitcoin trading indicators indicate a decline in leverage long activity.
The fact that bitcoin monthly futures often trade at a little premium to spot markets suggests that sellers are requesting higher prices in order to postpone settlement. Because of this, BTC futures contracts should normally trade at an annualised premium of 5% to 10%. This condition is known as contango, and it is not specific to the cryptocurrency markets.
The BTC futures premium is still trading in the neutral-to-bearish area, below the 5% neutral barrier. This suggests that leveraged long bets are not in high demand.
3. The anticipation of investors for a Bitcoin ETF declines.
The expectation that the U.S. Securities and Exchange Commission would approve a spot Bitcoin ETF is one of the things driving Bitcoin’s 68% gains in 2023. Nevertheless, there was little interest in the newly released Ether futures-based ETFs on October 2, even after the regulator repeatedly delayed them.
In addition, the Grayscale Bitcoin Trust is still trading 19% below its Bitcoin holdings, even after a court decision in favour of the conversion of the trust into a spot Bitcoin ETF.
Given that investors would be able to redeem their shares at par value after the conversion, this data suggests that there is a lack of trust in the approval of a spot Bitcoin ETF.
3 Reason for why Bitcoin isn’t rising beyond $28.5K,3 Reason for why Bitcoin isn’t rising beyond $28.5K,3 Reason for why Bitcoin isn’t rising beyond $28.5K