Bitcoin price fell 41% in the second quarter. It was the worst quarterly quarter after falling 43% in Q4 2018 and the fourth-worst drop in over a decade in Bitcoin’s history. Currently, open interest is about $ 11 billion. That’s below the $ 28 billion peak on April 13. Moreover, the ratio of long and short rates is biased towards short rates.
Is it worth buying bitcoin now, or will it only get cheaper in the future? Aaron Chomsky, Head of Investment Department at ICB Fund, answered a question from Fortrader magazine.
– Open interest in bitcoin futures has won back a third of the May drop when measured in BTC, and remains close to lows when measured in dollar terms. Along with the preservation of the discount from the net asset value of the bitcoin trust rate from the company Grayscale, which holds 3.1% of the total emission of the first cryptocurrency, and the insignificant inflow of funds into the BTC funds, which Coinshares monitors, this is a signal of continued restrained interest of institutional investors in space digital assets.
The current levels after a 50% correction in April-May are still not of great interest due to the risks of a resumption of the downward trend. In July, the lock-up period for the Grayscale bitcoin trust will end, which will provide an opportunity to exit this instrument if they previously acquired it with leverage. It is clear that the Chinese authorities are striving to eradicate cryptocurrencies completely as the digital yuan launches near.
Also, the US authorities have not yet “finished the work” on building a stricter structure for regulating the industry, which will better meet the objectives of protecting investors, preventing crimes in the financial sector, including tax evasion. This uncertainty continues to prevail and is likely to persist throughout the summer and, probably, fall. This is confirmed by the metrics of the crypto derivatives market. According to Skew, the options market estimates the decline in the bitcoin rate from current levels by the end of the year to $ 20,000 with a probability of 68.5%, and it is even higher for expirations in August-September.
Such expectations do not contradict the technical picture either. If in the short term, after a cascade of liquidations of futures and record sales at a loss of coins by late participants in the rally from October to April, as well as two failed attempts to go below $ 30,000, the market is positioned up to the upper border of consolidation ($ 40,000), then in the medium term the market is still under the control of the bears. During July-August, we can expect the formation of a new downward impulse with the capitulation of the “young” bulls remaining in long positions. Technically, the bitcoin rate can go just in the region of the mentioned $ 20,000.
Long-term prospects, as strange as it may sound, remain favorable. Almost all of Wall Street’s leading players are actively working to create the infrastructure for institutional investors to enter this space and await the removal of the current regulatory uncertainty. It is hard to imagine that they could just, without thinking, decide on such an investment. The Robinhood app will soon launch an IPO, which will make even more ordinary investors pay attention to cryptocurrencies. A trigger for the return of the growing dynamics in the future may be a correction in the stock markets, which will switch the status of bitcoin from a risky asset to a safe-haven asset, as an alternative to assets from the world of traditional finance.