Bitcoin’s value jumps up despite fundamentals showing major weakness

Posted: 1 July 2022 2:20 am

The rejection of Grayscale’s application to convert its BTC investment vehicle into an ETF could see the asset register losses in the near term.

  • The European Union (EU) has issued new sanctions against cryptocurrencies by limiting the movement of digital assets within the bloc.
  • Investors of all sizes continue to accumulate Bitcoin at a rapid rate ever since the currency scaled down to the $20K region.
  • Bitcoin’s total cap stands at $384B while its share of the crypto market lies at 41.5%.

After having dipped as low as $18,600 a little under 12 hours ago, Bitcoin (BTC) has regained some of its bullish momentum. BTC is now trading at $20,130 while exhibiting weekly losses of -4.7%.

This lackluster momentum comes amidst the digital currency failing to reclaim its all-important 200-week moving average (WMA), a popular metric used by traders to gain a sense of whether an asset is heading up or down, while also identifying potential support and resistance areas. Many analysts believe that Bitcoin’s support around $20,000 is just a “relief bounce” and that the coming few days could see more negative price action for the cryptocurrency.

The incoming downturn could be compounded by news of the United States Securities and Exchange Commission (SEC) recently rejecting Grayscale’s application to convert its popular Bitcoin investment instrument, the Grayscale Bitcoin Investment Trust (GBTC), into an exchange-traded fund (ETF). In response, the firm announced it would be suing the regulator for failing to provide an adequate reason for dismissing its application.

The European Union (EU) has also voted to heighten sanctions on all crypto transactions emanating within its borders. In a recent press release, a spokesperson for the administrative body noted:

“The agreement extends the so-called ‘travel rule,’ already existing in traditional finance, to cover transfers in crypto assets. This rule requires that information on the source of the asset and its beneficiary travels with the transaction and is stored on both sides of the transfer. Crypto asset service providers (CASPs) will be obliged to provide this information to competent authorities if an investigation is conducted into money laundering and terrorist financing.”

Following the announcement, the Crypto Fear & Greed Index, a popular metric to gauge consumer sentiment, dipped to a multi-month low of 11/100, highlighting extreme fear.

How to buy Bitcoin

BTC accrual efforts speeding up

While pundits are waiting for another capitulation scenario to arise, on-chain data suggests investors have been buying Bitcoin en masse. Glassnode analysts have noted that a growing forum of investors has continued to add BTC to their portfolios.

Holders with 10 coins or less in their wallets are not only stacking but doing so at a pace that has not been witnessed since 2017, a time when the crypto hit a relative high of $20,000. Whales are also taking their coins from exchanges and moving them to private wallets at a record pace.

Disclosure: The author owns a range of cryptocurrencies at the time of writing

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Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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