Bitcoin and other cryptocurrencies have struggled to gain momentum, entering a period of inactivity unlike any seen in recent times. This lackluster trend may soon worsen, potentially leading to a significant downturn.
Over the past 24 hours, the price of Bitcoin has only dipped by less than 1%, reaching slightly above $29,000. However, this steady decline has pushed the largest digital asset further away from the critical $30,000 level. This level has acted as a reliable support for Bitcoin prices over the last few months.
Yuya Hasegawa, an analyst at crypto exchange Bitbank, notes that the market appears to be adopting a cautious stance due to the historically low short-term volatility of Bitcoin. He believes that the next potential support could be around $28,000. Given the heightened concerns weighing on the market, a recovery above $30,000 within the next few days seems unlikely.
In recent months, digital assets have entered a period of stagnation and subdued trading activity. This tranquil phase stands out as one of the calmest periods in the history of cryptocurrencies. While historical patterns suggest that such a lull may precede a bullish surge, it offers no guarantees for short or medium-term market dynamics.
Bitcoin Faces Potential Challenges in Third Quarter
According to Antoni Trenchev, co-founder and managing partner at crypto lender Nexo, the third quarter of the year has historically been Bitcoin’s weakest period. This suggests that the cryptocurrency may experience further downward movement before any signs of improvement. Trenchev states that a drop to $25,000 wouldn’t be catastrophic for Bitcoin, but it is crucial for the digital asset to maintain a value above the 200-week moving average around $27,300. This moving average serves as an indicator of whether Bitcoin is currently in a bullish or bearish trend.
U.S. Consumer-Price Index (CPI) Inflation Data Awaited
In the upcoming days, crypto markets could be influenced by the release of U.S. consumer-price index (CPI) inflation data, scheduled for Thursday. These data will not only impact the crypto industry but also have an effect on the Dow Jones Industrial Average and S&P 500. As both cryptocurrencies and stocks are considered rate-sensitive risk assets, the relationship between U.S. inflation and Federal Reserve monetary policy carries significance for both markets. However, traders remain cautious and do not have high expectations for significant market movements as a result of the CPI print.
Bitcoin Lags Behind Traditional Finance
Trenchev notes that unlike traditional finance, Bitcoin has not experienced as much growth in recent months due to the deceleration of U.S. inflation and the expectation of an end to the U.S. tightening cycle. This indicates that the cryptocurrency market is currently in a summer lull.
The Performance of Other Cryptocurrencies
In addition to Bitcoin, Ether, the second-largest cryptocurrency, has seen a slight decrease of less than 1%, bringing its value to $1,830. Similarly, smaller cryptocurrencies or altcoins such as Cardano and Polygon have also experienced a decline of 1%. Memecoins, including Dogecoin and Shiba Inu, have shown even weaker performance, with a respective drop of 2% and 4%.