Why Bitcoin is Tanking to $60,000 Despite Stocks Hitting All-Time Highs

Things could get uglier if Bitcoin can't hold $58,000, says Thinking Crypto's Tony Edward

By: Zack Guzman

July 3, 2024

Bitcoin is experiencing a sharp downturn, hovering precariously near $60,000 per coin. This slump is starkly contrasted by the soaring stock market, where indices are hitting all-time highs. What’s causing Bitcoin to falter while traditional assets flourish?

Thinking Crypto Host Tony Edward joined Coinage to explain some of the market sentiment in the wake of nearly $9 billion worth of crypto unlocks stemming from the unlocks from infamous crypto exchange Mt. Gox. The exchange's bankruptcy has resulted in significant Bitcoin distributions to creditors. Although these disbursements are executed in batches, the looming threat of large sell-offs creates market anxiety.

Edward emphasized that while this situation adds to the current bearish sentiment, it's crucial to consider broader market dynamics.

"When in doubt, zoom out," he advised. "If you look at previous cycles, this kind of pullback is not unusual. Bitcoin had an unprecedented run-up before the last halving, driven by massive demand and ETF inflows. A cooldown was inevitable."

The strength of the US dollar is another key factor. A strong dollar typically weighs on Bitcoin, a trend evident in the current market. Tony pointed out that Bitcoin’s recent performance aligns with macroeconomic trends.

"We’re on track. This is a healthy consolidation phase, albeit longer than expected. Bitcoin couldn't sustain its previous highs without this pullback," he said.

It's a bit counterintuitive that the 13% retreat over the last month is coming now, when positive news seems abundant: stocks are at all-time highs, the Federal Reserve is adopting a dovish stance on inflation. This typically bullish environment for Bitcoin, paired with potential rate cuts, should theoretically support higher prices.

However, Edward explains this contradiction with the lagging effect of macroeconomic changes. "There's always a delay between positive macroeconomic news and its impact on Bitcoin. The ETF inflows and bullish sentiments will take time to materialize in price movements." Over the short-term, he's watching Bitcoin’s support level around $58,000, which matches a level flagged by a Glassnode report that note's it's also where short-term holder losses would substantially rise.

(Source: Glassnode)
(Source: Glassnode)

"If Bitcoin breaks below $58,000, it would invalidate many bullish setups and signal a deeper correction. However, I believe we’re near the bottom and will see a bounce soon," Edward said.

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