Bitcoin dipped below the long-held support at $30,000 on Tuesday, hitting the lowest level since Jan. 28.
The cryptocurrency traded at $29,700 shortly before press time, bringing the year-to-date gain down to just 3%, according to CoinDesk 20 data.
The drop comes a day after the People’s Bank of China ordered the country’s major financial institutions to stop facilitating crypto transactions and signals an end of the four-week-long consolidation between $30,000 and $40,000.
The market looks south with demand-side pressures weakening in the wake of regulatory fears and the Federal Reserve’s recent hawkish tilt, analysts told CoinDesk.
“There’s no direct evidence showing people in China are buying the BTC dip. As shown in the ChaiNext tether (USDT) OTC index, the value hovered at 99 for the last few weeks in June, which shows a slight discount in trading USDT,” Matthew Lam, an analyst at crypto exchange OKEx, said.
“There is little evidence of dip demand. People are still sidelined,” Amber Funds said in a Telegram chat.
Bitcoin price drop
Bitcoin peaked above $64,000 in mid-April and fell by 35% in May on the back of concerns regarding the negative environmental impact of cryptocurrency mining and renewed regulatory crackdown in China.
Last week, the Federal Reserve unexpectedly brought forward the timing of the first interest rate hike to 2023, adding to bearish pressures around the cryptocurrency.
While bitcoin is down 8% on a 24-hour basis, other major coins like ether, XRP, and cardano are nursing 10%-20% losses. Dogecoin, the joke cryptocurrency, is trading 25% lower.
As such, bitcoin’s dominance rate, or the top cryptocurrency’s share in the total market, has hit one-month highs above 47%, per data source TradingView.
Matthew Dibb, COO, and co-founder of Stack Funds, foresees a further rise in bitcoin’s dominance rate.
“I personally think the best trade right now for crypto (regardless of direction) is long bitcoin dominance or short alternative cryptocurrencies against bitcoin,” Dibb told CoinDesk.
“If the market falls, bitcoin should fall less than altcoins (we are seeing that recently),” Dibb said. “If the sentiment recovers, bitcoin will go up more than altcoins.”
- The absence of a quick recovery above $30,000 may bring more chart-driven selling.
- Key support is now located at $27,000, below which the focus would shift to the early December highs around $19,900.