Bitcoin slips below US $30,000 as experts suggest the down trend will continue
BTCs monthly losses currently lie around the -15% range
- Binance's ongoing regulatory troubles coupled with BlockFi's latest cease and desist order could be contributing to the ongoing marketwide volatility, experts suggest.
- GBTCs discounted rates suggest that institutional interest in crypto may be drying up a little.
- Analysts believe that Bitcoin has the potential to make a strong recovery by the end of 2021.
Crypto investors as well as Bitcoin maximalists all over the world seem to be sweating bullets at the moment, especially after the flagship cryptocurrency slipped below its all important AU $40k psychological threshold yesterday. As a result, BTC is currently exhibiting bi-weekly losses of nearly -10% while trading at a price point of AU $42,000.
Providing his thoughts on as to what may be causing this turbulence, Gunnar Jaerv, COO of First Digital Trust, told Finder that the recent onslaught of bad news — such as China's banning its local mining market, Binance's recent regulatory sanctions and lastly, the cease and desist issued against BlockFi by the New Jersey AG — seems to have played a huge part, adding:
"Although most of these stories do not have a direct correlation to Bitcoin itself, it does affect the market as a whole and usually the first to be affected will be Bitcoin. Due to the ongoing sell-off in the market, retail sentiment has remained bearish. Many of the retail traders who have entered the market have left and taken profit or cut losses."
Jaerv added that in the short term, Bitcoin may continue to consolidate around the US $30,000 price range, however, once things stabilize, he believes the digital currency may be able to bounce back big again. "In the long-term, BTC is poised to see a recovery, especially once retail investors are back investing into Bitcoin on exchanges because this was a key factor that drove the bull run from late 2020 to early 2021," he concluded by saying.
Institutional investors now avoiding BTC?
The ongoing bear market seems to have resulted in a massive dip in investor confidence in relation to BTC. Evidence of this lies in the fact that there has been a clear decline in interest in the market price of GBTC which has plummeted from -11% to -15% since mid-may. For those unaware, the Grayscale Bitcoin Trust (GBTC) is an investment vehicle that allows institutional and public market investors to gain exposure to Bitcoin without having to buy the digital asset directly.
That being said, even though BTC's institutional accumulation is on the decline, on-chain deposits of the flagships crypto to various exchanges have continued to grow, with an inflow of more than 28,700 BTC being recorded last Friday.
Has the S2F model been made redundant?
As BTC struggles to stay above the all important US $30k resistance, it appears as though the digital asset is now the furthest away from its correlation to the stock-to-flow (S2F) model since its inception. The model is the brainchild of Dutch investor/analyst PlanB and is widely considered to be one of the best quantitative valuations for the scarcity driven cryptocurrency.
The model presents a modern take on how one can potentially discover the future pricing of any scarce asset — ranging from digital one's like Bitcoin to precious metals such as gold, silver, platinum, etc. It now remains to be seen whether Bitcoin gets back on track and falls in line with the S2F model once again or whether the coming few days will see the flagship crypto face even more volatility.
Disclosure: The author owns a range of cryptocurrencies at the time of writing