Bitcoin falls below US$30,000 as institutional interest in ETFs fails to lift markets

Bitcoin fell 4.66% from July 14 to July 21 to US$29,755 at 7:35 p.m. Friday in Hong Kong. The world’s largest cryptocurrency by market capitalization has been trading under the US$30,000 mark for most of the week. Ether lost 5.38% over the week to US$1,885.

In continued institutional interest in Bitcoin ETFs, the U.S. Securities and Exchange Commission (SEC) has accepted eight applications for spot Bitcoin ETFs so far, with the first from BlackRock on July 13 and the second from asset manager Valkyrie on Monday.

“Institutional interest remains a driving force behind Bitcoin’s stability, as large corporations and financial institutions continue to invest in Bitcoin, while the SEC accepts more Bitcoin ETF filings for review,” Lucas Kiely, chief investment officer of digital asset platform Yield App, told Forkast.

“ETFs are set to open up the Bitcoin market, and potentially crypto markets in general, to a large pool of global investors who until this point have not considered buying Bitcoin or other cryptocurrencies. It’s grown clearer that governments are inclined to regulate rather than ban cryptocurrencies, and the Ripple ruling has provided a sense of relief in the US crypto industry.”

The SEC’s move to accept the first eight Bitcoin ETF filings for review inspired confidence in other top asset managers, Aziz Kenjaev, financial analyst and director of business development at cross-chain liquidity protocol Entangle, told Forkast,

“Investors and the crypto-community called this a beginning of a new bullish cycle. The US$30,000 is Bitcoin’s major support, therefore keeping Bitcoin above this level plays a key role for the bullish continuation of Bitcoin. It’s also a psychological level, whereas dropping below this level would trigger a panic sale in the market,” wrote Kenjaev, in a statement shared with Forkast.

In Europe, French bank Societe Generale on Tuesday obtained a crypto service license in the country that allowed its crypto unit, Forge, to offer crypto sales, custody and trading services.

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Bitcoin and crypto prices have been more correlated to macroeconomic conditions in 2023, wrote digital asset manager Grayscale Investments in a Friday report.

“Since January, Bitcoin has appreciated more than can be explained by the rally in tech stocks and fall in the US dollar. We think this reflects idiosyncratic positives, including optimism about eventual spot Bitcoin ETF approval, as well as Bitcoin’s surge in March following stress in regional banks,” wrote the report.

“Although crypto has healed significantly since late 2022, valuations are now more closely tied to broader macro trends, and more Fed tightening could be a headwind for higher risk assets, including both equities and cryptocurrencies.”

The global crypto market capitalization stood at US$1.2 trillion on Friday at 7:35 p.m. in Hong Kong, down 4% from US$1.25 trillion a week ago, according to CoinMarketCap data. With a market cap of US$578 billion, Bitcoin represented 48.3% of the market while Ether, valued at US$226 billion, accounted for 18.9%.

Notable Movers: MKR, XDC

Maker DAO’s (MKR) governance token was this week’s biggest gainer among the top 100 coins, rising 25.83% to US$1,151. The coin started picking up momentum on Friday, hours after crypto intelligence firm Lookonchain shared that a16z deposited 12,864 MKR tokens to Coinbase while CMS Holdings deposited 525 MKR to Binance, presumably selling the coins before the rally.

Enterprise-grade blockchain protocol XDC Network’s (XDC) token was the week’s second-biggest gainer, rising 25.15% to US$0.04187. The coin started picking up momentum yesterday, in anticipation of the protocol’s appearance at the Ethereum Community Conference (EthCC) in Paris.

See related article: USDT’s goal is to be the dollar, not beat it, says Tether CTO

Next week: Fed’s interest rate decision

The Federal Reserve’s next meeting on monetary policy is scheduled for next Wednesday. The CME FedWatch Tool predicts a 99.8% chance the Fed will raise interest rates by 25 basis points at the next meeting. U.S. interest rates are currently at 5% to 5.25%, the highest since 2006.

Entangle’s Kenjaev said that a close above last week’s high of US$31,800 will be needed to boost Bitcoin prices.

“The four-hour Bitcoin chart below clearly shows key levels to watch within this week. The parallel channel of June 30 signals the bearish continuation of Bitcoin for this week’s end. Although Bitcoin was able to jump back into the parallel channel, it has to close above $30,300 and remain above to continue bullish or at least guard itself from a panic sell,” wrote Kenjaev, referencing the below chart.

See related article: XRP’s partial victory as Russia inches toward CBDC; Arkham draws flak