Published on: https://www.coinspeaker.com/
Image source: https://www.vecteezy.com/photo/3462117-hand-holding-golden-bitcoin-coin
Resilience and surprising comebacks are some of Bitcoin’s defining hallmarks. In the frantic crypto space, where projects flourish and fade all the time, Bitcoin has managed not only to maintain its value and integrity and weather the harshest market conditions, bouncing back from huge price crashes numerous times, but it has also emerged stronger than before after each bear market.
Not many cryptos can make these kinds of claims or boast such remarkable features. The latest in Bitcoin’s long string of revivals happened in early 2024 when the crypto king stunned everyone by reaching a new record high weeks before the fourth halving event. Exchange platforms that track the Bitcoin price USD prediction in real-time documented the coin’s ascent from $43K at the beginning of the year to $73,750 on March 14.
Previously, it was largely assumed that Bitcoin would only be able to pass the threshold after the completion of the quadrennial event since that’s the pattern it had exhibited around past halvings. But the latest cut in Bitcoin’s mining reward brought on different dynamics, proving once again that Bitcoin is unpredictable and capable of astounding gains even when one least expects it.
This is obviously making many wonder when Bitcoin might reach its next record high. Unfortunately for the leading coin and those who were hoping for a new bull run, the signs don’t look too good. According to recent data and expert analysis, Bitcoin is not yet ready to rev its engines as it’s being held in place by investor skepticism and the risk of a looming recession.
Investors’ reluctance hinders Bitcoin’s growth
Historically, September hasn’t been a good month for Bitcoin as the crypto has generally recorded losses during this period. But this year, Bitcoin has once again departed from its previous trends and ended the month on a high note, above the $63K level. At the same time, the S&P 500 index showed a 2.1% gain in September, driven by favorable economic conditions such as expectations of relaxed monetary policies and optimism over profit potential.
However, despite these positive developments, crypto-specific metrics show that Bitcoin is not moving in a bullish direction. The main reason for Bitcoin’s inability to progress seems to come from investors’ skeptical attitude. Market participants are not quick to forget that the second half of 2024 was less eventful for the crypto lot, Bitcoin included. The original coin struggled but failed to surpass the elusive $70K mark several times. This has most likely weakened their confidence in the asset’s appreciation potential and made them less eager to invest in it.
While investors’ doubts might not necessarily mean that stakeholders are looking to sell their holdings en masse, it does create an undercurrent of tension and instability that can cause fear and doubt to spread among investors, and thus negatively impact Bitcoin’s price.
There are also talks about a potential recession shaping on the horizon. These concerns are fueled by central banks’ adoption of stimulating expansionary monetary policies, which are usually implemented by governments in the lead-up to an economic downturn. This may not be an issue for established companies, which can thrive even during periods of economic decline. But in the crypt realm, this news resonates differently. If investors are worried about an incoming recession, it’s to be expected that their appetite for high-risk assets like Bitcoin and crypto, by extension, is going to decline.
This means that the surge in the S&P 500 might not have any effect on Bitcoin price-wise. Under these circumstances, one has to look at the market’s evolution since Bitcoin’s last attempt at surpassing the $70K level and see if there are other factors apart from the recently adopted economic policies that could blow wind in Bitcoin’s sails.
China’s stablecoin demand suggests declining market sentiment
Apart from the recession probability and investors’ lack of trust, we also have a contrasting picture regarding Institutional demand for crypto painted by data coming from the US and Chinese markets. On the one side, we’ve seen the Bitcoin price being propelled to new highs by rising institutional inflows into US-based spot exchange-traded funds (ETFs). On the other side, the demand for stablecoins in China indicates that investor interest in crypto is declining.
To understand how things work, we need to explain that in the Chinese crypto market, stablecoins usually trade at 1.5% or more above the official US dollar rate when demand for crypto increases, and subsequently trade below this level when the demand slumps.
As such, the trading price for USDT in China has persisted under parity for several weeks, which can only be interpreted as a bearish sentiment. This challenges the belief that investors are flocking to spot crypto ETFs in the US market, signaling the opposite.
Another argument in favor of the bearish outlook is given by the neutral stance exhibited by those trading in Bitcoin futures markets. Their lack of conviction and implication is obvious from the stabilization of Bitcoin’s future premiums despite the asset’s price rally.
Long-term outlook
Looking at market indicators, most analysts seem to agree that Bitcoin is not in a good spot right now and doesn’t have what it takes to establish new records. However, this doesn’t mean Bitcoin is bound to remain trapped in the $60K range forever.
As we’ve come to learn by now, the tide always changes in the crypto space, and this is most likely but a phase in Bitcoin’s cycle. Unfortunately, there’s no way to know for sure how long it will take for the Bitcoin bulls to get back in the saddle and kick off a new rally, so the only thing that’s left to be done is to keep a close eye on market metrics, hoping for an upward trajectory in the near future.
