Bitcoin price dips below $28,000 as global macro liquidity continues to drain
- Bitcoin price is currently trading at $27,585, inching closer to the psychological support of $27,000.
- The macroeconomic condition is bearing a negative impact on Bitcoin as liquidity continues to drain due to banking failures and the weakening Dollar.
- BTC has a demand wall between $27,400 to $28,250, where about 560,000 BTC worth $15.44 billion are witnessing profits.
Bitcoin price has had a rather better performance over the last couple of weeks in comparison to the rest of the digital assets. This kept the cryptocurrency dominating the market, which, by the looks of it, might bear results if this happens.
The macro market conditions
Despite the macro market conditions being favorable for Bitcoin's growth, the cryptocurrency has not really rallied a lot. A reason behind this could be the fact that the broader market is still technically bearish, and BTC's run-up has been mostly the result of the excessive bearishness from the TradFi market.
As noted by popular analyst DonAlt, the S&P market performing well, failed to trigger a rally for Bitcoin. Gold doing well in the market had no impact either. However, the most bullishness observed has been during the US banking crisis and the weakening of the United States Dollar.
But this was not enough to trigger a move beyond $30,000, something the investors have been anticipating for a while now.
A reason could be that macro liquidity is constantly draining, with banks experiencing a decline in value. The recent bank failures further left users' deposits in a state of limbo, and the Dollar weakening had a similar effect. In line with the same, BTC also failed to garner much growth.
Besides, market participants are focused on making money right now instead of HODLing for long-term gains. This is visible in the fact that this is how meme coins like PEPE rose to fame.
Their rise took attention away from Bitcoin, which has been acting as a "store of value" for a long time now. As noted by DonAlt,
"People literally went from doubting the rally all the way to $30k to buying PEPE with their retirement money. Is what it is.
To make things worse for the cryptocurrency is the current regulatory landscape. Every company and every exchange is currently being highly careful of their approach given just earlier today, on May 8, Bittrex filed for Chapter 11 bankruptcy. In the official statement, the exchange noted,
"Bittrex is beginning the process of winding down its US operations… it's just not economically viable for us to continue to operate in the current US regulatory and economic environment.
Bitcoin price still has room for growth
Bitcoin price at the time of writing could be seen trading at $27,585 after slipping below the $28,000 mark on May 8. The cryptocurrency has three key support levels to watch out for, the first being $27,000, a support floor that has been unbroken for almost two and a half months now.
The next two levels are $26,192, coinciding with the 100-day Exponential Moving Average (EMA), as well as $25,000, a very important psychological support level.
BTC/USD 1-day chart
In addition to that, the range between $27,430 to $28,250 is also an important support range to look out for. This demand wall has about 560,000 BTC worth $15.44 billion currently in profits. As long as this range is maintained as support, the cryptocurrency might be able to regain the investors' funds as well as confidence.
The most significant support level for #Bitcoin is between $27,430 and $28,250, where 1.58 million addresses bought 560,000 $BTC. This demand wall must hold to prevent a downswing to $24,000-$24,900.
— Ali (@ali_charts) May 8, 2023
On the flip side, $BTC needs to break above $29,150 to advance further. pic.twitter.com/gWQmtPwhXl
As it is, investors are still either accumulating or moving their Bitcoin into self-custody wallets, given the conditions of the crypto exchanges right now. In regards to the supply on exchanges, in the span of 48 hours, nearly 180,000 BTC has left the exchanges.
The BTC supply across all crypto exchanges is currently at the lowest point in more than five years since December 2017. But regardless of this being selling or moving of supply, the selling pressure for a while is set to be minimal.
The amount of #Bitcoin on exchanges is now at its lowest ratio since December, 2017. The five and a half year low is a good sign of increased interest in self custody for traders, and less potentially at risk to be sold back to exchange wallets. https://t.co/U3n9McxcnH pic.twitter.com/8NjZLf0k2D
— Santiment (@santimentfeed) May 8, 2023
Author
Aaryamann Shrivastava
FXStreet
Aaryamann Shrivastava is a Cryptocurrency journalist and market analyst with over 1,000 articles under his name. Graduated with an Honours in Journalism, he has been part of the crypto industry for more than a year now.
