Bitcoin’s attempt to surpass a resistance level ends in failure, prompting an expert to advocate for an infusion of fresh capital into the cryptocurrency.
Bitcoin (BTC), the leading cryptocurrency, faced a setback as it failed to surpass a critical resistance level on July 12. The rejection occurred shortly after BTC’s approached the $31,000 mark, causing it to retreat.
This development has led to Bitcoin resuming its range-bound movement, with short-term holders opting to hold onto their coins rather than cashing in on profits. Amidst this scenario, industry experts are exploring the factors that could potentially trigger a significant move for the king of crypto.
Yann Allemann Sheds Light on Bitcoin’s Resistance Level and Capital Inflow
Yann Allemann, co-founder of Glassnode and CEO of Swissblock Technologies, shed light on Bitcoin’s failure to breach the $31,000 resistance level following the release of the Consumer Price Index (CPI) reading on Wednesday.
According to Allemann, the immediate volatility resulting from the CPI data release was likely influenced by traders, possibly whales, who strategically placed buy and sell walls to mitigate market volatility.
Additionally, Allemann noted that all macro updates, including better-than-expected inflation figures, had already been factored into Bitcoin’s price. Despite this, Bitcoin remains unaffected, prompting Allemann to conclude that the industry requires a catalyst to stimulate a fresh wave of capital inflow.
Although the excitement surrounding the Spot BTC Exchange Traded Fund (ETF) has waned, a positive development in this area could potentially provide the much-needed impetus.
The price action of Bitcoin has also sparked speculation about an upcoming capital rotation, where funds flow from one asset class to another. According to experts, Bitcoin has managed to hold its ground while altcoins have suffered.
Bitcoin’s Rally May Be Diminishing As Major Market Events Subside
Now that major market events such as the metaverse season, speculative trading, and the NFT Ordinals frenzy have run their course, Bitcoin may have exhausted the tailwinds that sustained its rally.
This possible scenario suggests that an altcoin season may be on the horizon. During an altcoin season, profits from Bitcoin, Ether (ETH), and new capital flow into alternative cryptocurrencies. This diversion of funds causes a decline in BTC’s market share and dominance in terms of market capitalization, while the market share of altcoins increases.
However, Allemann believes that the crypto market still requires a catalyst for this transition to occur. Currently, there are no apparent signs of such an impulse, indicating that the altcoin season may not be imminent. To support this viewpoint, Allemann points out that altcoins, including Ether, are showing signs of weakness and lack of demand.
One potential catalyst that could drive market dynamics is spot BTC exchange-traded funds (ETFs) approval. Despite recent rejections and subsequent re-filings, the consideration of BTC ETFs remains compelling.
Former Chair of the US Securities and Exchange Commission (SEC), Jay Clayton, has outlined critical factors for approval, such as investor protection and market surveillance. Applicants must demonstrate that approving these ETFs would not harm investors and provide evidence of their effectiveness.
At the time of writing, Bitcoin is trading at $30,356, experiencing a daily drop of nearly 1%. Its trading volume has increased by 10% over the past 24 hours, but it continues to remain within the range of $31,408 and $29,985. The market awaits a significant development that could potentially break the current stalemate and initiate a new phase for Bitcoin and the wider cryptocurrency industry.