Bitcoin [BTC] recovered quickly after peaking at just under $40,000. Investors are concerned about the current price action to the downside.
The most recent price sideways movement began after the dramatic drop in May and has now extended into the new quarter. The drop was so severe that it ended the digital asset’s winning streak, which had seen its prices rise above $60,000 for the first time in its decade-long history.
This trend, however, could soon come to an end as institutional players push the asset’s price higher. Here are three reasons why an uptrend could be on the horizon:
1. The return of institutional players
The institutional adoption for both 2020 and 2021 has undoubtedly been one of the most prominent recurring narratives for Bitcoin. While the entry of these players increased the price of the token. Institutional adoption appears to have taken a significant hit as a result of Tesla’s recent actions.
However, according to Santiment, a key member of the crypto-analytic platform, the king coin’s price could range until mid-July this year, before institutional players in the market drive the new BTC resistance level up to $40k. According to the analysis,
“When you’re having fun in the rain [especially when you’re a kid]. You’ve lost track of time. This month, the Bitcoin price is going through the same thing.”
2. Resemblance from June to December 2019
The current price action of Bitcoin bears an uncanny resemblance to that of June-December 2019. In fact, the flagship crypto-asset had risen above $14k in the final week of June 2019. Following that, it plummeted as FUD entered the market in the form of the Bitcoin Cash [BCH] hard fork, the then-US President Donald Trump’s stance on the token, and other news.
Six months later, Bitcoin had lost more than half of its gains and had fallen to $6.5k. As a result of the decline, the charts showed the formation of a death cross. However, as bulls bought the dips, Bitcoin recovered and gradually formed lower highs, briefly surging to $10,000.
In terms of the current situation, the latest trend could indicate a similar profit-taking phase, as well as a period of FUD sparked by Elon Musk’s announcement, China’s crackdown on cryptocurrency activities, and so on.
3. Bitcoin Trust in Grayscale
Many well-known cryptocurrency analysts believe that the expiration of investor restrictions on the sale of shares in the Grayscale Bitcoin Trust [GBTC] could lift the Bitcoin market in July, rather than the downward pressure previously reported by JPMorgan strategists.
One of the main possibilities that some market speculators see is for investors to enter the coin market to buy BTC. And repay crypto loans used to finance their initial purchases of GBTC shares. That is while selling GBTC shares does not eliminate the risk of deeper discounts. Which could potentially deter capital inflows, this adversary can be compensated by spot repurchases of the cryptocurrency.
Similarly, Amber Group, a digital asset service provider, tweeted,
“Lots of bearish chatter surrounding GBTC unlocks while conveniently ignoring the fact that in-kind subscriptions funded by debt will eventually translate into spot buying.”
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