The oldest and most well-known cryptocurrency, Bitcoin, is currently in a downtrend.
A significant reason for the current negative trend, according to experts, is the decision from the beginning of the year to approve exchange-traded spot ETFs (Exchange Traded Funds) in the USA. This decision initially led to a strong influx into digital assets and catapulted the Bitcoin price to a record high of almost 74,000 dollars. However, Timo Emden from Emden Research comments that, after the initial inflows, the outflows are now increasing the downward pressure on the price.
Investors are being impressively shown the downside of the ETF investment vehicles that have been approved in the USA since the beginning of the year," Emden continues. He emphasizes that there is currently little indication of a sustainable counter-movement, as there is a lack of uncertainty about the future design of US monetary policy. This uncertainty particularly affects risky investments such as Bitcoin or Ether.
Additionally, there is a concern in the market about a rapidly increasing supply of Bitcoin. The insolvency administrator of the trading platform Mt. Gox, which failed around a decade ago, has announced that repayments in Bitcoin and Bitcoin Cash will begin in July. These holdings, which resurfaced after the spectacular collapse, could significantly increase the supply in the market and thus further pressure the price.
Chart-wise, investors are still on thin ice according to Emden. Since mid-June, a downward trend has established itself, which has further intensified at the beginning of the week. The price of Bitcoin is currently significantly below the 21- and 50-day moving averages, which describe the short- and medium-term trends. Support is still provided by the much-watched 200-day line, which is considered a measure of long-term development.
Overall, it appears that Bitcoin investors are currently facing a number of uncertainties. The effects of ETF approvals, uncertainty about U.S. monetary policy, and the potential additional supply from the Mt. Gox repayments present significant challenges. Whether and when the Bitcoin price can recover sustainably remains to be seen.
