Following a fresh wave of regulatory crackdown on cryptocurrency mining operations in China, bitcoin saw a historic difficulty readjustment of nearly 28% last Saturday. The bitcoin network automatically adjusts the level of difficulty it takes to find a new block approximately every two weeks, or 2016 blocks, based on the amount of computing power on the network, so that new blocks are added on average every 10 minutes. In the near term, the remaining miners, especially those outside of China, stand to collect larger profits, however the market shows signs of stagnation.
Bitcoin is struggling to break out of the $34,000-range, trading at $34,618 as of 6:50 a.m. ET. According to data from Coinbase, bitcoin’s price has been range-bound between $33,197 and $35,909 over the last five days, with a five-day change of +2.4%.
Bitcoin price chart according to Coinbase
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“Bitcoin is in a consolidation phase between $30,000-$42,000 zone and we expect it to spend the next few weeks testing this range on either side,” wrote Pankaj Balani, CEO of crypto derivatives platform Delta Exchange, in a message to Forbes. “There are limited catalysts here for any break on the upside in the short term; on the downside however weakness in the economic data is a concern. Any weakness in the broader markets or reduction in liquidity can cause sharp down-moves in bitcoin. We see this reflected this in options data as well with puts trading at a premium to calls for July and August expiry.”
These observations dovetail with an overall tempering of the market after a volatile few weeks. The short-term volatility is now at 2-months low, reports Norwegian crypto analytics firm Arcane Research.
BTC-USD Volatility
Arcane Research
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Crypto Whales Remain Hungry
As analysts are looking for clearer signs in the broader market amidst this relative tranquility, crypto whales (individuals or entities with large amounts of crypto holdings) are ostensibly buying. On July 2, 18 new whales surfaced on the chain and the total bitcoin balance held by whale entities shot up by 82,760 BTC, or $2.87 billion at current prices, according to on-chain analyst Will Clemente. The spike “leads me to believe we may finally start to see some new big buyers step in” (a bullish sign), writes Clemente.
Additionally, a new survey by Nickel Digital Asset Management, $200 million U.K. crypto hedge fund, found that 82% of institutional investors and wealth managers from the U.S., U.K., France, Germany, and the U.A.E. who currently have exposure to cryptocurrencies and digital assets expect to increase their crypto holdings by 2023.
That said, not all are convinced that we are out of the bearish woods. Ben Lilly, a crypto economist at trading and analytics platform Jarvis Labs writes, “While we wouldn’t be entirely surprised to see the price run higher, we are leaning towards downside movements in the near term. Which means even if price does pop higher, we expect price will lack momentum and ultimately retest $32-30,000 support.”
Meanwhile, other top cryptocurrencies including Ethereum, BNB, Cardano and Polkadot are up on the week by 4.2%, 9.2%, 2.8% and 2.1% respectively.
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