Bitcoin's dip may continue, OANDA analyst Edward Moya says

Despite the positive sentiment surrounding the US stock market, Bitcoin and Ethereum were still unable to breach their key levels. The global market cap of cryptocurrencies fell 3% to around $1.2 trillion. The market cap of the S&P 500 and the Nasdaq futures also declined after the closing bell.

According to Edward Moya, a market analyst at OANDA, the risk assets that investors are most likely to avoid during the summer will remain relatively flat. Moya also noted the lack of buying interest suggests that the bottom has not been reached.

"Bitcoin prices remain weak despite a broad risk rally on Wall Street. It looks like most crypto traders are hesitant to buy the dip, which most likely means that the bottom has not been made," Moya said.

However, Moya suggested that the price of cryptocurrencies could eventually recover once Wall Street believes that the Federal Reserve will stop raising interest rates.

Lowest market sentiment

According to market intelligence platform Santiment, investors' sentiment regarding Bitcoin has reached its lowest level since the Black Thursday of March 2020. It noted that the lack of liquidity could still provide investors with opportunities.

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In a weekly report, Glassnode revealed that the decline in the returns of both Bitcoin and Ethereum has affected the price of the two cryptocurrencies. The compound annual growth rate of Bitcoin has dropped from over 200% in 2015 to less than 50%. Over the last 12 months, the four-year return of Ethereum has decreased to 28% from 100%, while that of Bitcoin has fallen to 36%.

According to Ali Martinez, a chartist, Bitcoin's crucial level is around $29,330 and $30,200. There are approximately 1.2 million addresses that hold almost 850,000 Bitcoin around that price range.

Martinez also noted that Bitcoin needs to break above this resistance level to prevent the ongoing decline from continuing. Failure to do so could cause the price of the digital currency to fall further.

Bitcoin's historic lows

In 2011, Bitcoin was on its way to becoming one of the most popular cryptocurrencies before it started to fall. Then, on June 19, Mt. Gox, the world's largest Bitcoin exchange, revealed that criminals had stolen and hacked hundreds of accounts, causing the value of Bitcoin to plummet by 99%.

In 2012, it was revealed that a fraudulent scheme was bilking cryptocurrency investors out of over 700,000 Bitcoin. The scheme was allegedly based on the promise of 7% weekly interest. This Ponzi scheme resulted in a more than 50% price drop.

Bitcoin was also a victim of its own success in April 2013, when it gained widespread acceptance due to the sensational nature of the new opportunity presented to investors. Due to the sudden surge in trading, Mt. Gox could not handle the volume, and it crashed, causing it to go offline for an unprecedented period. Bitcoin dipped more than 80% during these times.

After China banned Bitcoin in late 2013, the value of the digital currency dropped 50%. Despite the country's efforts to improve its relationship with cryptocurrencies, its restrictions remain in place.

The year 2017 was a momentous year for Bitcoin, as it was able to break all of its own records and reach a high of $20,000. Then, on December 27, the price of Bitcoin crashed, causing it to drop below $12,000.

It would then remain in the doldrums throughout the rest of the year as various factors kept affecting its value. One of these included the hacks in Japan and Korea and rumors that the two countries were planning on banning Bitcoin.