Can Bitcoin float above US$27,500 after sinking below US$30,000?

Bitcoin fell 8.48% in the week from April 14 to 21 to trade at US$28,114 at 7:30 p.m. on Friday in Hong Kong. The world’s largest cryptocurrency by market capitalization has been trading below US$30,000 since Wednesday. Ether rose 8.66% over the week to US$1,923.

Bitcoin fell below US$29,000 on Thursday for the first time since April 10, leading to the liquidation of over US$266 million worth of long positions in a 24-hour period, according to futures data provider Coinglass.

“The drop below US$30,000 may have been [caused] by built-up leverage, which resulted in liquidations, but it’s unlikely to last,” John Isige, an analyst at crypto trading platform Vauld told Forkast in a LinkedIn message. “Investors can look toward US$27,500 ahead of a larger bounce back above the now pivotal US$30,000.” 

The global crypto market capitalization stood at US$1.19 trillion on Friday at 7:30 p.m. in Hong Kong, down 7% from US$1.28 trillion a week ago, according to CoinMarketCap data. Bitcoin’s US$544 billion market cap accounted for 45.73% of the market, while Ether’s US$231 billion accounted for 19.4%.

U.S. Securities and Exchange Commission Chair Gary Gensler addressed the House Financial Services Committee during a congressional oversight hearing on Tuesday, where he repeatedly evaded the opportunity to clarify whether Ether, the native cryptocurrency of the Ethereum blockchain, should be labeled as a security. 

The European Parliament voted in favor of the Markets in Crypto Assets (MiCA) on Thursday, a framework to standardize regulations for crypto assets across the world’s third-largest economy. It is now pending approval from the European Council. 

See related article: Bitcoin, other cryptos fall as investors book profit

Biggest gainers: OKX & CSPR

The OKX crypto exchange’s utility token (OKB) was this week’s biggest gainer among the top 100 coins by market capitalization listed on CoinMarketCap, rising 10.92% to US$52.82. The token started picking up on Monday, after OKX announced that it would add layer-1 blockchain Sui’s token (SUI) to their jumpstart program. This will allow investors to trade OKB for SUI at a discount.

Proof-of-stake blockchain Casper Network’s CSPR coin was this week’s second biggest gainer, with an 8.06% price increase to trade at US$0.04919. The coin started its rally last Saturday, days after announcing the launch of the Casper Wallet on April 11.

Next week: Bitcoin’s US$27,500 resistance 

According to a March 31 court filing, the U.S. government seized 51,351.89 Bitcoin (worth US$1.4 billion) from Ross Ulbricht, the creator of the darknet marketplace Silk Road. The government sold 9,861 Bitcoin (US$279 million) on March 14 and is planning to sell the remaining 41,490 Bitcoin (US$1.1 billion) in four batches this year.

Bitcoin values will decline further in the short term as “the U.S. plans to sell its remaining 41,490 Bitcoin, which I’m expecting to happen soon,” said Kasper Vandeloock, chief executive officer of quantitative trading firm Musca Capital. “Bitcoin is up 70%+ year to date. It’s only expected that investors are taking profits or derisk,” he added.

Vauld analyst Isige said that US$27,500 will be a key price level next week.

“Bitcoin needs a weekly close above US$27,500 or the 50-day EMA on the daily timeframe to weaken its downside potential and confirm an upward trend. Primary support traders will be looking at US$24,000, although US$27,500 is a price level we must watch keenly. Its upside is primarily capped by the seller congestion at US$30,000,” wrote Isige.

Meanwhile, concerns over interest rate hikes in the world’s largest economy have reignited as Atlanta Federal Reserve President Raphael Bostic and St. Louis Fed President James Bullard said it is too early to consider pausing interest rate hikes. The U.S. inflation rate dropped to 5% in March, above the Fed’s target of 2%. 

“Considering they called inflation ‘transitory,’ it is reasonable to assume we will get a potentially long and hard recession that affects risk assets, such as Bitcoin. The stock market additionally seems to be setting up for a difficult second half of 2023, which would likely drag Bitcoin and crypto, as well. [As low as] US$9,000 remains in play,” wrote Santos.

“The price will need to hold above US$30,500 for 5-7 weekdays to confirm the low. Until then, moves to the upside are nothing more than bear market rallies,” he added.

See related article: Crypto firms hardpressed to find U.S. bank partners as industry blames ‘Operation Choke Point 2.0’