Bitcoin's price has fallen to its lowest since early February, with on-chain analysts predicting a further 16% drop to around $47,000 as the next support level. This prediction implies a 25% decline from the average purchase price of short-term Bitcoin investors. It is anticipated that a significant portion of new market entrants will sell their holdings once this price level is reached.
Currently, Bitcoin is trading at $57,654, down 19.10% over the past month but up about 2.33% in the last 24 hours. Analysts note that such corrections were expected, similar to the 60% drop during the COVID-19 panic in March 2020.
According to Joe Burnett, a former Blockware Solutions analyst and current senior product marketing manager at Unchained, two primary factors are affecting Bitcoin's price. The continued selling pressure from Mt. Gox and German authorities is expected to impact BTC. Recently, Germany transferred 3,000 BTC to various exchanges and still holds 40,359 BTC. Similarly, Mt. Gox moved $2.7 billion worth of Bitcoin to fulfill a $9 billion creditor repayment.
This selling pressure has driven Bitcoin's price down to $53,550, the lowest in four months. Burnett suggests that once this pressure eases, large buyers might stabilize the market, potentially leading to a price recovery.
Despite these challenges, analysts remain optimistic about Bitcoin's future, particularly if Donald Trump wins the upcoming election, which could drive Bitcoin to $100,000 by Election Day. A Financial Times survey from July 5 indicates that a potential Trump return could significantly boost Bitcoin's value.
Crypto traders are increasingly considering the "Trump trade" due to Trump's perceived pro-crypto stance and policies. Industry leaders believe that a Trump administration, backed by a strong Republican presence in Congress, would create a more favorable regulatory environment for cryptocurrencies.
Traders are also observing the impact of the "basis trade" in Bitcoin, where hedge funds use borrowed money to bet on the convergence of Bitcoin futures and ETFs, reducing price volatility. The notion of the "Trump trade" is gaining traction, especially after recent presidential debates.
Manuel Villegas, an analyst at Julius Baer, notes that Trump's energy policies could benefit mining companies by allowing the use of alternative energy sources for Bitcoin mining. It is unlikely that a Trump administration would support Biden's proposed 30% mining tax.
Furthermore, Trump's policies could lead to significant government deficit and debt levels, limiting the Federal Reserve's ability to adjust interest rates, potentially boosting Bitcoin's price. Bitcoin's price movements are closely linked to key U.S. Treasury indicators, such as the spread between 2-year and 10-year bond yields and expected inflation rates.
Betting markets like Polymarket are seeing increased stakes on Biden's withdrawal from the race, with over $11 million wagered. However, Bitcoin's momentum might remain weak if Biden withdraws and is replaced by a more competitive candidate against Trump.
Kendrick, head of digital asset research at Standard Chartered, suggests that Biden is likely to run, increasing Trump's chances of winning and potentially pushing Bitcoin to a new high of $100,000 by August.
As of July 7, Bitcoin's price outlook is uncertain, with bearish sentiment meeting oversold signals. Currently trading at $57,654, with a 2.33% increase in 24 hours, it remains below the pivotal $60,000 level. The immediate support is at $56,500, and if this level doesn't hold, Bitcoin could test further support at $52,000.
However, if the price holds above $56,500, combined with an oversold RSI, it could attract buying pressure, pushing the price towards $60,000. Consolidating above this level is crucial for a bullish reversal, potentially testing $67,000.
The coming days are crucial. Breaking the $56,500 support indicates significant downside risk. Conversely, stabilizing and increasing buyer interest could pave the way for a recovery towards $60,000 and beyond.
