The Price of Bitcoin Sees a Temporary Increase but Faces Downward Pressure
On October 2, the price of Bitcoin (BTC) experienced a 5.5% intraday rise to $28,600. However, the launch of Ether (ETH) futures exchange-traded funds (ETFs) did not generate significant trading volumes, causing Bitcoin to lose momentum. This decrease in trading activity, combined with concerns about an impending economic downturn expressed by US Federal Reserve representatives, have impacted Bitcoin’s short-term support levels.
Macroeconomic Forces Impact Bitcoin’s Price
The US Federal Reserve Vice Chair for Supervision, Michael Barr, stated that he expects economic growth to slow down due to higher interest rates constraining economic activity. The real yield on US 10-year Treasurys also reached its highest level in nearly 15 years, leading to the US Dollar Index (DXY) reaching a 10-month high. Additionally, the US has become a more attractive investment destination compared to Europe and China due to its resilient economy and stronger growth prospects.
Bitcoin Trading Metrics Indicate Decreased Activity
Bitcoin monthly futures are currently trading below the neutral threshold, indicating a lack of demand for leveraged long positions. Spot trading activity on traditional exchanges has also declined significantly, suggesting reduced participation by institutional investors. This decrease in trading volumes may be attributed to major US-based trading firms distancing themselves from the cryptocurrency markets due to heightened regulatory scrutiny.
Investor Confidence in Spot BTC ETF Approval Drops
The anticipation of approval for a spot Bitcoin ETF by the US Securities and Exchange Commission has been one of the factors supporting Bitcoin’s gains. However, the recent launch of Ether futures-based ETFs saw lackluster demand, indicating a lack of confidence in the approval of a spot Bitcoin ETF. The Grayscale Bitcoin Trust, which could be converted into a spot Bitcoin ETF, continues to trade at a discount compared to its Bitcoin holdings.
Hot Take: Bitcoin Faces Challenges Amidst Economic Concerns
Despite the temporary increase in price, Bitcoin is facing downward pressure due to macroeconomic forces and a lack of confidence in the approval of a spot Bitcoin ETF. The prospects of breaking above the $28,500 resistance level in the short term seem unfavorable. It is important for investors to closely monitor market developments and consider the potential impact of economic factors on the price of Bitcoin.
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