Bitcoin Falls Back Below $31K After Late Monday Surge

The head of research for digital asset manager 3iQ wrote that the largest cryptocurrency by market capitalization is still riding tailwinds from multiple spot bitcoin ETF filings and other June events.

AccessTimeIconJul 10, 2023 at 10:50 p.m. UTC
Updated Jul 11, 2023 at 1:09 a.m. UTC

Bitcoin returned briefly on Monday to its recent, loftier heights above $31,000 before dipping slightly below the threshold.

The largest cryptocurrency by market capitalization was recently trading at $30,690, up almost 2% over the past 24 hours as investors seemed to regain the enthusiasm they held following spot bitcoin ETF filings by BlackRock and other financial services giants in mid June and other mildly crypto-friendly events during the month.

BTC last traded above $31,000 on Thursday. It sank along with other assets amid renewed inflationary worries raised primarily by an unexpectedly robust ADP private sector jobs report, even sinking below its most recent support of $30,000. But those concerns seemed to vanish, and after lingering just above this level, bitcoin jumped more than 2% over a roughly 90-minute period during the afternoon before retreating.

Bitcoin has risen 20% over the past month, much of the gains coming after the spot BTC filings. A report by British multinational bank, Standard Chartered Bank, early Wednesday (ET) said that bitcoin could hit $50,000 by year's end and over $120,000 by the close of 2024.

"Today’s lift in digital assets comes from several June tailwinds that are only now being digested," Mark Connors, head of research for digital asset management firm 3iQ, wrote to CoinDesk. "June price action was BTC dominant due to the slew of spot BTC ETF filings," he wrote, also noting favorable comments about the application by former Securities and Exchange Commission (SEC) Chair Jay Clayton.

In a CNBC appearance Monday, Clayton said that if the filings addressed certain protections that bitcoin futures ETFs include, that it would be difficult to "resist approving a (spot) bitcoin ETF."

Connors wrote that investors may also be slowly warming to the possible approval of the Congressional Digital Assets Market Structure and Investor Protection Act, which would establish whether a digital asset is decentralized. "If passed into law, such a determination can be meaningful as most developers do not want to join a centralized entity bound by securities laws," he wrote.

Ether was recently changing hands at about $1,890, up 1.8% from Sunday, same time. Other major cryptos turned from red to increase or jumped more squarely into positive territory with MATIC and ADA, the tokens of the smart contracts platforms Polygon and Cardano, rising more than 6% and 2%, respectively. BNB, the native crypto of the Binance exchange recently rose over 4%.

The CoinDesk Market Index, a measure of crypto markets performance, was recently up 1.9%.

Equity indexes rebounded from a rare 2023 off week with the S&P 500 and Nasdaq Composite both ticking up as investors looked hopefully toward Wednesday's June U.S. Consumer Price Index (CPI). The CPI sank to 4% in May, down from the 9% reading of almost a year ago.

Consensus estimates call for the index to fall below 4%, although Edward Moya, senior analyst for foreign exchange market maker Oanda, wrote in a note Monday that CPI could tumble to 2.8% even as housing prices remain inflated. The potentially contradictory data and last week's confounding jobs data (nonfarm payrolls sank slightly) could complicate the U.S. central bank's much anticipated decision to raise the interest rate later this month.

The Federal Reserve probability tracker is currently forecasting a more than 90% likelihood of a 25 basis point rate hike (bps), but critics of the Fed's more than year-long monetary hawkishness believe bankers are overstepping and risk casting the economy into a recession. "Even if we get a hot report, the Fed is locked into delivering a quarter-point rate rise," Moya wrote. "Following last month’s pause, the Fed seems positioned to remain aggressive with signaling tightening until we see a much more meaningful slowdown."

Aggressive rate increases have weighed heavily on crypto markets. Moya expects bitcoin to remain at about $30,000 "as Wall Street awaits any US Bitcoin ETF update, and as market expectations for a 25 basis point hike at the next Fed meeting seems very likely."

Edited by James Rubin.


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James Rubin

James Rubin was CoinDesk's U.S. news editor based on the West Coast.