Bitcoin Jumps Back Above $30K After A Volatile Trading Session

Bitcoin’s near 50% decline from all-time highs came as a surprise to many, as China’s crackdown on Bitcoin continued bearish sentiment.

Bitcoin had a volatile Tuesday, briefly dipping below $30,000 for the first time since January before settling around $34,000 at time of publication. The world’s largest cryptocurrency by market value is still up about 11% year to date.

Simon Peters, analyst at multi-investment platform eToro commented the latest market volatility:

“The primary reason for the sell-off has been the crackdown in China on mining operations and banking services.”

Regulatory pressure from China has always been a positive driver for cryptocurrencies, which is why the near-50% decline from all-time highs surprised some analysts.

Sean Rooney, head of research at crypto asset manager Valkyrie Investments, commented:

“The news out of China regarding mining and trading crypto may seem dramatic to newer investors, while those with experience should be accustomed to the progression of this news over the past several years.”

Maybe an intensified regulatory crackdown was not fully calculated in the price given how the price of bitcoin nearly doubled over the past year.

Nick Mancini, research analyst at crypto sentiment data provider Trade the Chain, said:

“Today we polled our 950+ person community to gauge their opinion on where the bitcoin bottom may be, and we received split answers for $28,600 and $25,500.”

Others remain more optimistic about where bitcoin’s price is going. According to Stephen Kelso, head of markets at ITI:

“Bitcoin is currently trading approximately one-third below its long-term exponential trend line.

Given the market forces and demand for scarcity assets to protect wealth, ITI believes this is an attractive buying opportunity for investors.”

For now, $30,000 remains a key support level, but technicals indicators show limited upside towards $34,000-$36,000.

Case: MicroStrategy

MicroStrategy’s latest bond issuance to raise funds for the company to buy more bitcoin is now trading below its face value as the cryptocurrency continues to fall in value.

Prices on the $500 million bond, which closed on June 15, dropped almost three points after the company said on Monday it completed its purchase of 13,005 bitcoin at an average price of $37,617.

According to the latest count after the last purchase round, MicroStrategy held 105,085 bitcoins. The company so far has issued over $1.5 billion in convertible notes and junk bonds to fund bitcoin purchases. 

Decline In Active Crypto Addresses

Bitcoin and Ethereum on-chain data shows low demand for transactions over the past few months, since the markets started to fall. 

According to Glassnode:

“Both Bitcoin and Ethereum have experienced dramatic slowdowns in on-chain activity, with active addresses and total transfer volume falling back to 2020 and early 2021 levels.”

Bitcoin’s active addresses have fallen 24% from the March peak levels. Ethereum’s fall in active addresses has been even more extreme, dropping 30% from peak levels. 

Digital Asset Funds Face Outflows

Digital asset investment products just experienced a third consecutive week of outflows, with a total $79 million for the week ending June 18. This marks the longest bear run in outflows since February 2018 when outflows lasted seven consecutive weeks, according to a recent CoinShares report.

The report highlighted:

“The focus of outflows continues to be bitcoin, which has endured its sixth consecutive week of outflows totaling $89 million.”

Bitcoin Futures’ Interest Drops

The total open interest in the bitcoin futures market is sitting at $11.3 billion, down 59% from its April 13 peak of $27.3 billion, according to Arcane Research. 

The downward trading indicates institutional investors are being “cautious” at the moment, Arcane said in a report. It also notes that three-month futures in bitcoin are in “backwardation,” meaning they are traded at a discount to current spot prices. That is generally perceived to be a bearish signal. 

Altcoin Summary

Regulated crypto bank Anchorage Digital said it will provide custody and staking support for FLOW, the native token of the Flow blockchain.

Crypto custody provider Fireblocks is being sued by a company that claims it lost access to more than $70 million worth of ether, according to a report by Calcalist. Fireblocks said it is investigating the issue.

Lex Sokolin explained why ether’s price is built on firmer ground than bitcoin’s. Bitcoin’s thesis rests on a theory of money and power, while ether has a more durable footing: creative computation, according to Sokolin. 

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