KEYTAKEAWAYS
- Bitcoin price oscillating between $64,000 and $69,000; support holds despite recent $2,000 intraday drop.
- Jersey City Pension Fund applies for Bitcoin ETF investment, following Wisconsin's $160 million Bitcoin holdings.
- Senator Lummis to unveil Strategic Bitcoin Reserve legislation at Nashville conference on Saturday.
CONTENT
Bitcoin market analysis amid recent volatility. Key factors: Trump’s upcoming speech, pension fund interest, and potential strategic reserve legislation.
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Yesterday, Bitcoin experienced a significant intraday drop, falling by over $2,000, reaching a low of 63,456. Ethereum saw an even more dramatic decline, falling nearly 8%. This downturn is primarily attributed to the sharp drop in U.S. stocks, which triggered a ripple effect across the crypto market, reflecting a broader sense of panic in global financial markets.
Analysis of the 24-hour trading volume suggests that early investors have not shown signs of panic. Most of the selling pressure came from investors who bought in during the past week. Even the distribution from miners didn’t significantly impact early investors. However, the price decline did cause panic among recent investors who are now at a loss, leading to a substantial exit of these traders from the market.
MARKET OUTLOOK AND POTENTIAL CATALYSTS
The current market narrative is relatively weak. Even Ethereum, with its recently launched spot ETFs, may be entering a sell the news phase. Despite initial inflows, Ethereum ETFs have seen a net outflow of $19 million in their first two days, largely due to significant withdrawals from Grayscale’s ETHE. Meanwhile, other tokens without such catalysts are struggling even more in the current market conditions.
Two upcoming events could significantly impact the market:
- PCE Price Index Release: On Friday at 8:30 a.m. ET, the Personal Consumption Expenditures (PCE) data will be released. This is a crucial economic indicator, especially given that many investors are anticipating Federal Reserve rate cuts as early as September. However, if inflation shows signs of persistence, these expectations may need to be reassessed.
- Trump’s Speech at Bitcoin 2024 Conference: Donald Trump is scheduled to speak at the Bitcoin 2024 conference in Nashville on Saturday. Market participants are eagerly anticipating potential groundbreaking statements from the former president.
>>> Read more: Buy or Sell? Ethereum ETFs Make Their Wall Street Debut
TRUMP’S POTENTIAL ANNOUNCEMENT AND STRATEGIC BITCOIN RESERVE
As the weekend approaches, traders are hesitant to bet against Bitcoin due to heightened expectations surrounding Trump’s possible announcement. Rumors suggest that Trump might propose establishing a strategic reserve for Bitcoin, potentially to court the influential crypto lobby, which has amassed $150 million for the Crypto Super PAC.
Contributing to this anticipation, Senator Lummis of Wyoming, known for the crypto-friendly stance, is set to unveil legislation for a Strategic Bitcoin Reserve at the Nashville conference. This proposed bill would mandate the treasury to maintain Bitcoin as a strategic reserve asset, comparable to gold.
At present, the treasury’s gold reserves are valued at $600 billion, while the US government possesses confiscated Bitcoins worth $15 billion. There’s speculation that Trump might suggest increasing the Bitcoin holdings to approximately 10% of the gold reserves, or possibly more.
PENSION FUNDS ENTERING THE BITCOIN MARKET
Another crucial factor is the increasing interest from pension funds in Bitcoin investments. The Jersey City Pension Fund has recently sought SEC approval to invest a portion of its assets in a Bitcoin ETF. This move could potentially inspire other pension funds to consider including Bitcoin in their investment portfolios.
Previously, the Wisconsin Pension Fund disclosed Bitcoin holdings valued at $160 million. For context, the Wisconsin fund manages $156 billion in assets, while Jersey’s fund is roughly half that size at $76 billion.
The potential impact of widespread pension fund investment in Bitcoin could be substantial. U.S. pension funds collectively manage nearly $40 trillion in assets. If these funds were to allocate just 0.1% to Bitcoin, following Wisconsin’s example, it would result in Bitcoin holdings worth $40 billion.
BITCOIN AND ETHEREUM TRADING ANALYSIS
Bitcoin: Wide-range fluctuations remain the most likely scenario, with the price expected to oscillate between $64,000 and $69,000, a densely traded range. As long as support in this range holds, broad fluctuations are likely to continue.
Ethereum: On the daily chart, Ethereum is currently in a downtrend, with no clear signs of bottoming out yet. However, the four-hour chart has shown some potential reversal signals. Whether these shorter-term indicators will evolve into a reversal on the daily timeframe remains to be seen and requires further price action for confirmation.
INCREASING MARKET DIFFERENTIATION
This cycle’s recent downturn and subsequent rebound have highlighted an emerging trend: increasing differentiation among various digital assets. The divergence in price movements is likely to become more common in financial markets moving forward. We can expect to see more sector-specific rotations and individualized trends among different cryptocurrencies.
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