The enthusiasm of Bitcoin bulls was short-lived as new yearly highs quickly turned into a downward spiral towards new lows in July. Following the opening of Wall Street on July 6, Bitcoin experienced continued rapid fluctuations in its value.
Monitoring data from Markets Pro and TradingView closely tracked the price action of BTC as it oscillated around the $30,000 threshold. Earlier in the day, Bitcoin had surged to its highest levels since mid-2022, but unfortunately, the excitement was short-lived as the leading cryptocurrency relinquished all of its gains.
The downward trend was evident as BTC/USD reached new lows for the month of July on Bitstamp, with the price bottoming out at $29,925. Traders observed this unfolding situation with caution, realizing that what seemed like a dream come true for short-term profit-taking (known as scalping) was now raising uncertainties about what would happen next.
Among those closely monitoring the market, popular trader Jelle contemplated the possibility of Bitcoin retracing back to the $28,000 range, which he considered a suitable point for entering new buy positions.
Financial commentator Tedtalksmacro argued that the recent upward movement from below $30,000 was primarily driven by direct buying (spot buying) rather than speculative trading. However, he noted that derivatives traders were catching up, resulting in the sweeping of range highs.
Michaël van de Poppe, the founder and CEO of trading firm Eight, expressed his observations on Twitter, stating that the lows were being breached once again. He emphasized the need for a reversal to the upside; otherwise, there was a high likelihood of Bitcoin reaching the $28,500 level. The market’s expectations were influenced by positive employment data in the United States, which raised anticipations of an interest rate hike by the Federal Reserve later in July.
Market Avoids Panic As Bitcoin Holds Steady
According to CME Group’s FedWatch Tool, these expectations were at nearly 95% at the time of writing, contributing to the overall market sentiment. Despite the decline below $30,000 wiping out open interest, the liquidation of Bitcoin holdings remained relatively calm.
Data from CoinGlass, a monitoring resource, revealed that the combined liquidations of both long and short positions on BTC amounted to $43 million on July 6. Cross-crypto liquidations across various digital assets totaled approximately $120 million, indicating that the market had not reached extreme levels of panic selling or liquidation.