Why is bitcoin price stagnant?

Bitcoin (BTC) price has been floating within a tight trading range for several days, and August 2nd is no different.

Why is bitcoin price stagnant?

Bitcoin price fell almost 1% on the day to around $29,500. Still, the move lower was part of a flat market trend that started a week ago, with the price trading in the range of $28,850 to $29,660.

BTC/USD four hour price chart. Source: TradingView

The sideways trend follows Bitcoin’s 4% drop below $30,000 last week, largely due to the Federal Reserve’s rate hike. Rate hikes have historically been negative for non-yield cryptocurrencies like bitcoin.

Nonetheless, Wall Street economists expect a pause in rate hikes at the next Fed meeting in September, which could limit Bitcoin’s downtrend below $29,000.

On the downside, broader market risks have seen BTC struggle to stay above $30,000 – a psychological resistance level. These include regulatory uncertainty surrounding Binance — the world’s largest crypto exchange by volume — and a recent Defi exploit that cost $47 million.

The ongoing conflict of biases in the bitcoin market is accompanied by a waning of institutional interest. Investors withdrew about $19.4 million from Bitcoin-based mutual funds in the week ended July 28, according to CoinShares weekly report.

Net flow into crypto funds by assets. Source: CoinShares

“93% of outflows came from long bitcoin investment products, while short bitcoin saw outflows totaling $3.1 million for the 14th consecutive week,” wrote James Butterfill, investment strategist at CoinShares, adding:

“This suggests that investors have taken profits over the past few weeks and overall sentiment for the asset remains positive.”

Bitcoin price outlook for August

From a technical perspective, Bitcoin is currently holding above its 50-day exponential moving average (50-day EMA; the red wave) and is targeting a close above $30,000, its immediate resistance level.

Related: ETF Analyst Raises US Spot Bitcoin ETF Admission Odds to 65%

If the price breaks $30,000, the probability of BTC rallying towards $31,500, a local top, is high for the month of August.

BTC/USD daily price chart. Source: TradingView

The upside target seems valid as long as BTC price remains above its multi-month ascending trendline support. Still, there is a risk that if there is a significant break below the 50-day EMA and the ascending trendline, Bitcoin could plunge towards its 200-day EMA (the blue wave) near $27,000.

This level served as support during the March-April session earlier this year.

This article does not contain any investment advice or recommendations. Every investment and trading activity involves risk and readers should do their own research in making their decision.

Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers