August is here and Bitcoin has started it in a negative fashion. While it hasn’t dropped in price that much, it definitely lost a bit of the gain from last week. From the Bitcoin high in November last year, BTC’s price has dropped a whopping 51%. To make matters worse, the current status quo will most likely continue.
The new week started with a 3% drop and lower volume. Bitcoin’s dominance in the market is slightly higher than before. It currently sits at 42%, which is 2% more than January 1. The latest drop could be linked to a drop in traditional markets as well as Nancy Pelosi’s controversial Taiwan visit. Ethereum’s price has dropped too following a great increase in past weeks, with most altcoins down for the moment too.
A Step Back
After a week of rising prices, Bitcoin has taken a small step back. The price strike makes sense if we take a look at the open interest in the Bitcoin market. This represents the volume of option orders to buy or sell at different prices, giving us an insight in the interest. Compared to last week, it has gone up when it comes to Bitcoins bought at $23,000. The call option, which is the right but not obligation to buy, remains at $25,000, showing the price bullish investors are willing to buy BTC.
The so-called realized price which shows realized market capitalization divided by Bitcoin supply is at $21,000. Bitcoin has moved up this price after falling below it a few months ago. Surpassing the price shows that BTC investors have moved into a profitable range. The more of them sit in the green, the more the current price serves as additional support.
The current prices may also be underpinned by coins that simply lie dormant. Their number has grown. While some of them might simply have been lost, some investors have no plans on selling. That keeps the price down according to some experts, and will continue if this metric persists.
U-Turn After Pelosi’s Taipei Visit
Another factor drove the Bitcoin price down this week. It was spiking above $23,000 on the day when the White House announced that Pelosi will head to Taipei. The visit came after China warned the USA of retaliation, which the Biden administration probably ignored.
The visit was highly touted as the start of World War III, but it went without a hitch. Traditional markets have suffered, however, and so has the crypto market, mainly Bitcoin.
Considering the current global political climate, the next few weeks and months are supposed to be very volatile. This is because of macro events that play a bigger part in crypto prices than ever before.
The daily closes are bullish right now, and a price reversal might be coming soon. In the broad picture, no one expects Bitcoin to go under $20,000 again right now. Which is good as it may be too much of a strike for new investors looking to jump onto the market.