Research firm 10x Research is warning about a potential Bitcoin downturn BTC/USD to $55,000.
What Happened: This forecast comes from the firm’s research report, outlining ten crucial factors that could contribute to bearish sentiment.
According to the report, Bitcoin entered a downtrend on June 20, based on a trend model followed by many institutional investors.
This technical indicator suggests that trend-following funds, also known as Commodity Trading Advisors (CTAs), might increase their short positions, especially given the current low volatility environment.
Adding to the bearish outlook, weekly and monthly reversal indicators are signaling a broader correction.
The weekly Relative Strength Index (RSI) peaked in early March and has been declining despite Bitcoin maintaining levels above $60,000.
Similarly, the monthly Stochastic oscillator is showing patterns similar to previous multi-month peaks, such as those observed in January 2018 and May 2021.
Political factors are also playing a role in the cryptocurrency market’s uncertainty.
The recent Presidential Debate has unexpectedly shifted the political landscape, potentially impacting the future of crypto regulation in the United States.
While former President Donald Trump is seen as pro-crypto, the possibility of a different Democratic candidate could lead to stricter crypto policies, contrary to market expectations.
The report also highlights concerns about institutional adoption. Despite the launch of Bitcoin ETFs earlier this year, inflows have been less robust than anticipated.
After an initial surge of $12 billion from early February to mid-March, additional inflows have slowed significantly, rising by only $2.2 billion since then.
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Why It Matters: The report highlights more potential areas of concern.
Macroeconomic And Seasonal Factors
The Federal Reserve’s stance on interest rates remains hawkish, with inflation proving stickier than projected. This could lead to rates staying higher for longer, potentially dampening enthusiasm for risk assets like cryptocurrencies.
Seasonal trends are another consideration.
Historically, the third quarter (July, August, and September) has been the weakest for Bitcoin, with average returns of just 5% over the past 13 years.
This compares unfavorably to the second and fourth quarters, which have seen average returns of 64% and 62%, respectively.
The report also points to stagnation in stablecoin inflows since the Bitcoin halving in April, suggesting a potential liquidity crunch in the crypto market.
Without fresh fiat inflows, the market may struggle to sustain higher prices.
Miner Selling
Mining economics are another potential pressure point.
With the average miner’s breakeven cost now around $60,000 following the halving, sustained trading below this level could force miners to liquidate their Bitcoin holdings at a loss, similar to the events following the Luna/Terra collapse in 2022.
Furthermore, the outperformance of Ethereum relative to Bitcoin, following hints of potential ETH ETF approvals, mirrors historical patterns where crypto assets rally into significant events but sell off once the catalyst has passed.
Lastly, the report notes the impending expiration of $10 billion worth of Bitcoin and Ethereum ETH/USD options on June 28. This event could lead to increased price volatility as the market adjusts to a new equilibrium.
As the cryptocurrency community grapples with these potential headwinds, all eyes are turning to upcoming industry events for further insights. One such pivotal gathering is Benzinga’s Future of Digital Assets event, scheduled for Nov. 19.
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