Sophia’s Thoughts on the $30,000 hurdle
Bitcoin has been hovering around a price of $30,000 since mid March. What’s driving this enduring sideways movement?
These are Sophia's Thoughts:
The Bitcoin price was pushed up early in the year by improving sentiment and strong fundamentals.
But, right now, we are observing signs that Bitcoin sentiment is weakening.
And, after the recent price increases and regulatory developments, Bitcoin’s fundamentals are also looking weak.
We see Bitcoin continuing to hover around $30,000 until something drastically changes in the US crypto market.
Join Indicia Labs for free now at www.indicia.io!
🚀 Last week’s market performance
The market and Bitcoin ended up more than 3% down. This mostly came from a sudden decline on Monday after moving sideways beforehand. Sophia was mostly neutral last week. She perceived valuations to be fair with regards to sentiment and fundamentals.
One of the biggest winners of the week was Trust Wallet Token (TWT) with a gain of 12%. It broke its losing pattern from June. Sophia flagged TWT as one of the most bullish coins last week.
On the other side, Rocket Pool (RPL) was one of the biggest losers. It dropped more than 14% over the last 7 days. Sophia had flagged RPL as one of the most bearish coins last week. And several technical analysts also agreed.
🧐 What is your crypto mood today?
In each Sophia's Thoughts newsletter, we ask about your crypto mood. Your response to this question helps Sophia get a better sense of the pulse of crypto markets. And this ultimately translates into better insights for you when combined with Sophia's AI models. Your data empowers Sophia to provide you with even better intelligence going forward!
🎢 Bitcoin spins right round, right round
Bitcoin started the year at $16.5 thousand. It quickly increased above $30 thousand by April after the collapse of Silicon Valley Bank, Signature Bank, and First Republic Bank. Since then, however, Bitcoin has been hovering around $30,000. It crossed the 30k mark whenever positive developments occurred. Like after the Ripple lawsuit win against the SEC or the BlackRock spot Bitcoin ETF application. But it also dropped far below $30,000 when things didn’t look too good. Like after the SEC sued Binance & Coinbase in June and Bitcoin dropped to $25,000.
As Bitcoin hovers around the $30,000 mark, experts and influencers have varied opinions on its future trajectory. Marcel Pechman, a Cointelegraph analyst, attributes Bitcoin’s struggle to maintain the $30,000 level to macro and regulatory worries. However, Pechman also says that bulls (that is, speculators who have a positive outlook on the market) will succeed in holding $30,000 as a support level. Some even believe that Bitcoin could trigger a massive rally. Standard Charter predicts that the Bitcoin could reach $120,000 by the end of 2024.
Among these varied opinions, one thing is clear: the $30,000 mark is a significant milestone for Bitcoin. Its future movement will be closely watched by all investors.
😍 Sentiment providing support. Not anymore?
Bitcoin sentiment (as expressed on social chatter and online news) has improved since the start of the year. At the beginning of 2023, sentiment was slightly negative. It oscillated throughout the year. And generally spiked whenever the price of Bitcoin spiked. The spot Bitcoin ETF applications by Blackrock, Fidelity, and others provided a new boost in June. And the Ripple lawsuit win pushed sentiment to new highs. Some investors responded to the Ripple win with increasing hype.
A new development this week promised to boost sentiment but failed to lift prices. Sam Altman’s Worldcoin was launched yesterday. Worldcoin promises to offer proof of personhood for the world population by using the blockchain. Leading up to the launch, Worldcoin was hyped as a revolutionary development that would showcase a solid use case for crypto. But, since the launch, the reception has been mixed.
The mixed reception of Worldcoin is representative of a new trend we have detected in recent weeks. Crypto sentiment spiked after the Ripple win and remains strong for Bitcoin. But broader sentiment has started to cool off recently. Our proprietary investor sentiment score has dipped into neutral territory in the last three weeks.
This rug-pulling scam has been linked to wallets controlled by Alameda Research. That’s the cryptocurrency trading firm linked with Sam Bankman-Fried (SBF), who is infamously known for the FTX collapse. SBF has been under house arrest in his parents’ basement. He has lost most technology privileges by only being allowed to use a flip phone and pre-approve websites.
🔬 The fundamentals are (not) alright
Sentiment lifted crypto prices in 2023. But Bitcoin had an additional boost: its strong fundamentals. Early in the year, the Bitcoin valuation appeared to be low relative to the strength of its fundamentals.
This, however, reverted over the course of the year. As the Bitcoin price increased, its fundamentals appeared more fair. By the time July came around, fundamentals appeared to be holding Bitcoin back. After the Ripple win, other coins that serve as alternatives to Bitcoin and are no longer deemed to be securities are having their time in the spotlight.
Ripple says U.S. banks will want to use XRP cryptocurrency after partial victory in SEC fight (CNBC)
Bitcoin bulls ‘have work to do’ after XRP price spikes 104% (Cointelegraph)
The Ripple lawsuit win has shifted the framework for Bitcoin. At least temporarily. We remain to see whether the SEC will appeal the Ripple decision.
SEC Says XRP Ruling Was Wrong, Signals It Will Appeal (Wall Street Journal)
How appealing: Will the SEC challenge the court’s Ripple ruling? (Fortune)
Does the SEC’s Appeal vs. Ripple Stand a Chance? (BeInCrypto)
🧐 Now what?
We are at an interesting point in time now. Bitcoin sentiment remains strong but is showing signs of cooling. Bitcoin’s fundamentals are also not looking super strong right now. On top of this, there is also high uncertainty as to how crypto will be regulated in the US.
The ripple effect: A new wave in digital asset regulation (The Hill)
Binance, Coinbase and the Future of Crypto Regulation (Nerdwallet)
One Hot July Week Could Transform The Future Of U.S. Crypto Regulation (Forbes)
Because of this, we see Bitcoin continuing to hover around $30,000 until something changes. The change could come in the form of regulatory clarity in the US (other countries are further advanced). Or it could come in the form of a novel development that brings new users into the Bitcoin ecosystem.
There are, of course, also significant risks that may crack the support for the $30,000 hurdle. If the SEC appeals the Ripple decision and wins, that could spell trouble for Bitcoin as a proxy for the crypto market. Similarly if Binance, Coinbase, or other crypto exchanges struggle to continue to operate in the US. Even worse: if we do end up entering a recession and investor sentiment declines, we could see outflows out of Bitcoin. Investors should always weigh the potential rewards against the potential risks when considering crypto investments.
Indicia Labs does not provide investment, tax, or legal advice. You are solely responsible for determining the suitability of any investment, investment strategy, or related transaction based on your personal investment objectives, financial circumstances, and risk tolerance. Indicia Labs may offer educational information about digital assets, which may include blog posts, articles, third-party content, news feeds, tutorials, and videos. This information does not constitute any form of advice, and you should not rely on it as such. Indicia Labs does not recommend buying, earning, selling, or holding any digital asset and will not be responsible for any decisions you make based on the provided information. Any content provided by Indicia Labs may contain errors, inaccuracies, or outdated information and should not be relied upon for making any investment decisions and Indicia Labs and its affiliates hold no responsibility for the accuracy of the provided information or content.
As with any asset, the value of digital assets can fluctuate, and there is a significant risk of losing money when buying, selling, holding, or investing in digital assets. Consult your financial advisor, legal or tax professional regarding your specific situation and financial condition, and carefully consider whether trading or holding digital assets is suitable for you.
Indicia Labs is not registered with the U.S. Securities and Exchange Commission and does not offer securities services in the United States or to U.S. persons. You acknowledge that digital assets are not subject to protections or insurance provided by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation.