As the cryptocurrency market responds to a project rug on Coinbase’s BASE chain and CRV liquidations that affect investors’ faith in altcoins, the price of bitcoin is declining today.
On August 1, as the price of Bitcoin ended the month of July down 5.4%, the bullish momentum that had catapulted Bitcoin to a 75% year-to-date gain was all but gone. On July 31, the price of bitcoin temporarily dropped below $29,000; it is still below this significant resistance level.
Some analysts have issued a warning due to the decline in Bitcoin’s price, stating that BTC may fall as low as $25,000.
The market structure for bitcoin shifts downward
According to independent market expert Charles Edwards, the market structure of bitcoin had been bullish for a few months, but current price movement has changed it to bearish in a shorter amount of time.
Edwards drew attention to the recent divergence in the relationship between the price of Bitcoin and the S&P 500.
The S&P 500 has had its best winning streak in years while Bitcoin has been struggling, and the Fed has basically stopped raising rates at a time when monetary policy is at its tightest point in history.
Edwards continued by mentioning new crucial Bitcoin price support levels of $28,000, $26,000, and even $20,000 in later remarks.
The market is convinced that the Fed will again stop interest rate increases, despite Federal Reserve chair Jerome Powell’s lack of firm pronouncements regarding the interest rate decision on September 20.
The FedWatch tool from CME demonstrates the prevailing market perception that such rises will occur at the upcoming FOMC. The likelihood of an interest rate halt is 81.5% as of August 1.
The mood of cryptocurrency investors is still declining.
Over $20 million in long Bitcoin positions have been liquidated since July 31. When BTC longs are closed out without the buying pressure of trading volume, the price of bitcoin is negatively impacted. Since early 2021, the volume of bitcoin has fallen to its lowest point.
Since the beginning of July, the Fear and Greed Index, a crucial indicator of investor emotion, has been declining due to a lack of new volume. Despite having a “greed” emotion at the beginning of July, the index presently displays neutral market sentiment.
Another factor influencing the price of bitcoin in the short term is probably protocol exploits and investor cash being lost.
Investor sentiment is likely to be impacted by an alleged rug pull on Coinbase’s Layer 2 BASE from the BALD developer, in addition to the Curve scenario’s danger of contagion to DeFi and the crypto industry. Prior to the SEC filing a complaint on July 31 against Hex founder Richard Heart for utilizing more than $12 million of investor cash to purchase high-end luxury things, the investor monies were stolen.
The SEC reportedly ordered that all cryptocurrencies other than Bitcoin be delisted over the weekend,
