BTC Resistance: Factors Driving Bitcoin Price Action Dynamics & Their Impact On Investors

BTC’s price action dynamics remain steadfast of late, with a particularly robust outlook for short-term traders, courtesy of the institutionalised investors.

The enhanced activity by Bitcoin whales, reduction of supplies across exchanges and falling US inflation rates pose significant impacts on investors across the crypto market.

Source : Kanchanara/Unsplash

By Roshan Aslam

Over 100,000 Bitcoins have been taken off the exchanges in the last 30 days. Additionally, almost 5 per cent of all Bitcoin circulation is currently positioned within ETFs, with 34 ETFs currently holding over 1 million Bitcoins. Contrary to popular belief, the Bitcoin market has been testing its resistance multiple times over the last few days, and technical analysis suggests BTC price looks ready to adopt a bullish momentum soon.

BTC prices nosedived earlier in June, amidst several developments. This continued ahead of the US Federal Reserve's 4th FOMC meeting and the release of the US Consumer Price Index (CPI) data. However, the US authorities left the interest rate unchanged in a hawkish move, but the market soon surged 6 per cent following the announcement. 

While the interest rate cuts were expected by a small number of retail traders ahead of June 12, the overall market expectations put the odds for a rate cut at only 2.2 per cent in June. Experts believe that a rate cut will take place soon, with July holding the odds of 8 per cent and September with an odds of over 50 per cent. Experts have reiterated the notion even after the Federal Reserve announcement, with no certainty over when the rate cut can be expected for the rest of the year. 

What’s Next For Bitcoin?

At the time of writing, BTC is trading at a valuation of $67,392 with a slump of 1.25 per cent since the FOMC meeting. $69,000 has been identified as the immediate significant resistance for the world’s largest cryptocurrency, as the bearish outlook is driven by uncertainties in the near future and their economic effect. 

Despite this, BTC’s price action dynamics remain steadfast, with a particularly robust outlook for short-term traders, courtesy of the institutionalised investors. This has been proved multiple times with the influx of spot ETFs before 10th June. Bears have a particular interest in maintaining the BTC prices below the $70,000 mark, as they stand to lose over $1 billion if the BTC price overtakes the $70,300 level. 

Stop-loss measures and significant selling can be expected in the near future too, as bears will look to test BTC’s robust nature to stop a potential upward movement. However, proactive bulls led by institutionalised investors and ETFs will provide adequate momentum to Bitcoin which can lead to new all-time high levels of well over $73,780. An immediate target of $75,342 can be adopted for short-term investors, with an upside potential of up to 50 per cent by 2025. 

Enhanced Whale Activity

Keeping the FOMC meeting and unchanged federal interest rate aside, the BTC market witnessed one of the biggest inflows since February 28. On 11th June, Bitcoin whales gathered over 20,000 coins with an estimated valuation of $1.38 billion. This indicated a significant bullish aspect of the Bitcoin market and bolstered the near future outlook amidst price fluctuations. The ongoing price drop has initiated buying turns for retail and institutionalised investors, with volumes overtaking 36 billion since 12th June. This translates directly to the price drop in recent weeks, however, it must also be considered that despite market corrections BTC has managed to stay in the green on the monthly chart, providing a return of just over 7 per cent.

Coupled with increased whale activities, the fact that there has been a significant reduction of Bitcoin on crypto exchanges further reinforces the near-term price appreciation models for Bitcoin. 

Presently, Bitcoin reserves across exchanges are down to 942,000 — the lowest since December 2021. This indicates the increasing confidence of both retail and institutionalised investors in near-future price appreciation and a significant long-term bullish momentum, as they move their portfolio of coins to more secure private wallets. 

Implications On Investors

The enhanced activity by Bitcoin whales, reduction of supplies across exchanges and falling US inflation rates pose significant impacts on investors across the crypto market. This indicates many considerable BTC holders are expecting price appreciation in both the near-term and long-term future, which has resulted in buying on the dips to strengthen their positions. 

The ongoing market behaviour can also lead to enhanced stability in the Bitcoin market as institutionalised investors are unlikely to book profits in slight market corrections but are more likely to average their holdings — something that has been taking place in the last couple of days. 

Furthermore, reduced reserves across exchanges directly point to a positional shift in market psychology, highlighting a potentially favourable stance for long-term investors. However, investors need to adopt a broader outlook on upcoming economic, regulatory and technological developments associated with the price dynamics of the market before deciding to invest in the cryptocurrency.

(The author is the Co-founder and CEO of GoSats)

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.