{"id":13519,"date":"2023-10-05T19:27:40","date_gmt":"2023-10-05T19:27:40","guid":{"rendered":"https:\/\/cryptoheretostay.com\/?p=13519"},"modified":"2023-10-05T19:27:41","modified_gmt":"2023-10-05T19:27:41","slug":"3-reasons-why-bitcoin-is-struggling-to-rally-above-28-5k","status":"publish","type":"post","link":"https:\/\/cryptoheretostay.com\/?p=13519","title":{"rendered":"3 reasons why Bitcoin is struggling to rally above $28.5K"},"content":{"rendered":"<script type=\"text\/javascript\">\r\namzn_assoc_placement = \"adunit0\";\r\namzn_assoc_tracking_id = \"totafreearti-20\";\r\namzn_assoc_ad_mode = \"search\";\r\namzn_assoc_ad_type = \"smart\";\r\namzn_assoc_marketplace = \"amazon\";\r\namzn_assoc_region = \"US\";\r\namzn_assoc_default_search_phrase = \"crypto\";\r\namzn_assoc_default_category = \"All\";\r\namzn_assoc_search_bar = \"false\";\r\namzn_assoc_title = \"\";\r\namzn_assoc_rows =\"1\";\r\n<\/script>\r\n<script src=\"\/\/z-na.amazon-adsystem.com\/widgets\/onejs?MarketPlace=US\"><\/script>\n<p>On Oct. 2, the price of Bitcoin (BTC) saw a 5.5% intraday increase to $28,600, but the largest cryptocurrency by market capitalization lost momentum as the highly anticipated launch of Ether (ETH) futures exchange-traded funds (ETFs) failed to generate significant trading volumes.\u00a0<\/p>\n<p>While the recent rally into the upper end of the current price range was likely encouraging to investors, recent comments from United States Federal Reserve representatives reiterated concerns about an impending economic downturn.<\/p>\n<p>Bitcoin demonstrated short-term strength by maintaining support at $27,200 on Oct. 3 and subsequently surged above $27,500 on Oct. 5. Nevertheless, three key trading metrics indicate a lackluster level of support. These metrics encompass spot market volumes, derivatives and confidence in the approval of a spot Bitcoin ETF.<\/p>\n<h2>Macroeconomic forces exert downward pressure on Bitcoin price<\/h2>\n<p>On Oct. 2, U.S. Federal Reserve Vice Chair for Supervision Michael Barr\u00a0stated in New York that he anticipates a slowdown in economic growth \u201cbelow its potential\u201d due to higher interest rates constraining economic activity. He also noted that the full impact of the current monetary policy has yet to be realized. According to the CME FedWatch tool, the market is currently evenly divided on the possibility of another interest rate hike by the Fed in 2023.<\/p>\n<p>On Oct. 3, the real yield on U.S. 10-year Treasurys, a measure that adjusts for inflation, reached 2.47% \u2014 its highest level in nearly 15 years \u2014 according to data from the U.S. Treasury Department. This development partly explains the U.S. Dollar Index (DXY) reaching its highest point in 10 months.<\/p>\n<p>Additionally, Reuters reported that the U.S. has become a relatively more appealing investment destination due to its \u201cresilient economy,\u201d boasting stronger growth prospects when compared with Europe and China.<\/p>\n<h3>Bitcoin trading metrics show diminished activity for leverage longs<\/h3>\n<p>Bitcoin monthly futures typically trade at a slight premium to spot markets, indicating that sellers are asking for more money to delay settlement. As a result, BTC futures contracts should typically trade at a 5%\u201310% annualized premium \u2014 a situation known as contango, which is not unique to crypto markets.<\/p>\n<p><em>Bitcoin 2-month futures annualized premium. Source: Laevitas\u00a0<\/em><\/p>\n<p>The BTC futures premium continues to trade below the 5% neutral threshold, remaining in the neutral-to-bearish range. This indicates a lack of demand for leveraged long positions.<\/p>\n<p>Additionally, spot trading activity on traditional exchanges has declined to levels not seen since late 2020, signifying reduced participation by institutional investors.<\/p>\n<p><em>Bitcoin daily spot trading volume, USD. Source: Messari and Kaiko\u00a0<\/em><\/p>\n<p>It\u2019s worth noting that the decrease in trading volumes may be attributed to major U.S.-based trading firms, such as Jane Street Group and Jump Trading, distancing themselves from the cryptocurrency markets ahead of May 2023. Bloomberg reported that the primary reason for this shift was \u201cheightened regulatory scrutiny,\u201d which rendered the market less appealing to institutional investors.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Bitcoin price drops its early week gains \u2014 Here is why<\/em><\/strong><\/p>\n<h3>Investors\u2019 expectation for a spot BTC ETF drops <\/h3>\n<p>One of the factors supporting Bitcoin\u2019s 68% gains in 2023 is the anticipation of approval for a spot Bitcoin ETF by the U.S. Securities and Exchange Commission. However, despite the regulator\u2019s multiple postponements, the recent launch of Ether futures-based ETFs on Oct. 2 saw lackluster demand.<\/p>\n<p>Furthermore, despite a favorable court ruling for the conversion of the Grayscale Bitcoin Trust into a spot Bitcoin ETF, it continues to trade at a 19% discount compared with its Bitcoin holdings. This data indicates a lack of confidence in the approval of a spot Bitcoin ETF, as investors would have the option to redeem their shares at par value following the conversion.<\/p>\n<p>Ultimately, Bitcoin was unable to surpass the $28,500 resistance level, and Federal Reserve representatives warned of impending economic pressures. Consequently, the prospects of breaking above this resistance in the short term appear less than favorable.<\/p>\n<p class=\"post-content__disclaimer\">This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author\u2019s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.\n<\/p>\n<p><script type=\"text\/javascript\">\r\namzn_assoc_placement = \"adunit0\";\r\namzn_assoc_tracking_id = \"totafreearti-20\";\r\namzn_assoc_ad_mode = \"search\";\r\namzn_assoc_ad_type = \"smart\";\r\namzn_assoc_marketplace = \"amazon\";\r\namzn_assoc_region = \"US\";\r\namzn_assoc_default_search_phrase = \"bitcoin\";\r\namzn_assoc_default_category = \"All\";\r\namzn_assoc_search_bar = \"false\";\r\namzn_assoc_title = \"\";\r\namzn_assoc_rows =\"1\";\r\n<\/script>\r\n<script src=\"\/\/z-na.amazon-adsystem.com\/widgets\/onejs?MarketPlace=US\"><\/script><br \/>\n<br \/><a href=\"https:\/\/cointelegraph.com\/news\/3-reasons-why-bitcoin-struggles-to-rally-above-29k\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>On Oct. 2, the price of Bitcoin (BTC) saw a 5.5% intraday increase to $28,600, but the largest cryptocurrency by market capitalization lost momentum as the highly anticipated launch of Ether (ETH) futures exchange-traded funds (ETFs) failed to generate significant trading volumes.\u00a0 While the recent rally into the upper end of the current price range [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":13520,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_wp_rev_ctl_limit":""},"categories":[2],"tags":[],"class_list":["post-13519","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bitcoin-news"],"_links":{"self":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/13519","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=13519"}],"version-history":[{"count":1,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/13519\/revisions"}],"predecessor-version":[{"id":13521,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/13519\/revisions\/13521"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/media\/13520"}],"wp:attachment":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13519"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13519"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13519"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}