Investors began last week with confidence in Bitcoin, but these 3 factors prevent BTC price from regaining the $30k Level.

On October 2, Bitcoin’s price increased by 5.5% intraday to $28,600. Still, the largest cryptocurrency by market capitalization lost steam as the eagerly awaited debut of Ether futures exchange-traded funds (ETFs) failed to attract considerable trading volumes.

Investors may have found solace in the recent advance to the higher end of the price range. Still, recent remarks from U.S. Federal Reserve officials have re-emphasized worries about an oncoming economic slump.

Bitcoin held support at $27,200 on October 3 and climbed past $27,500 on October 5, showing its short-term resilience. However, three important trading criteria indicate a weak degree of support. These indicators include volumes traded on the spot market, derivatives, and confidence in approving a spot Bitcoin ETF.

On October 2, Vice Chair for Supervision Michael Barr of the U.S. Federal Reserve said in New York that he expects the economy to develop slowly and “below its potential” due to rising interest rates stifling business activity. He added that the current monetary policy has not yet had its full effect.

The CME FedWatch tool indicates that the market is now evenly split on whether the Fed will raise interest rates again in 2023.

Data from the U.S. Treasury Department show that on October 3, the real yield on 10-year Treasury bonds, which accounts for inflation, reached 2.47%, the highest level in almost 15 years. The U.S. Dollar Index (DXY) hitting its highest level in 10 months can be partially attributed to this trend.

According to Reuters, the United States has grown to be a comparatively more alluring investment location due to its “resilient economy,” which has better growth prospects than Europe and China.

Metrics for BTC Trading Indicate Decreased Activity

3 Factors that Prevent BTC Price from Regaining the $30k Level

The fact that monthly BTC futures often trade at a slight premium to spot markets suggests sellers request a higher price to delay settlement. BTC futures contracts should, therefore, typically trade at a 5%–10% annualized premium, a condition known as contango that is not specific to crypto markets.

The BTC futures premium keeps trading in the neutral-to-bearish zone, below the 5% neutral threshold. This data suggests that leveraged long bets are not in high demand.

Furthermore, spot trading activity on conventional exchanges has decreased to levels last seen in late 2020, indicating decreased engagement by institutional investors.

In addition, large U.S.-based trading companies like Jane Street Group and Jump Trading may have distanced themselves from the cryptocurrency markets before May 2023, which may cause a decline in trade volumes. According to Bloomberg, “heightened regulatory scrutiny,” which made the market less desirable to institutional investors, was the main cause of this shift.

According to Bloomberg, “heightened regulatory scrutiny,” which made the market less desirable to institutional investors, was the main cause of this shift.

Expectations from Investors for a Spot BTC ETF Fall

3 Factors that Prevent BTC Price from Regaining the $30k Level

The expectation that the U.S. Securities and Exchange Commission will approve a spot Bitcoin ETF is one of the factors boosting Bitcoin’s 68% gains in 2023.

However, despite the regulator’s persistent delays, there was little interest in the recently launched Ether futures-based ETFs on October 2.

In addition, the Grayscale Bitcoin Trust continues to trade at a 19% discount compared to its Bitcoin holdings despite a favorable court decision for its conversion into a spot Bitcoin ETF. Given that investors would have the opportunity to redeem their shares at par value after the conversion, this data suggests little confidence in approving a spot Bitcoin ETF.

In conclusion, BTC could not break over the $28,500 barrier mark, and Federal Reserve officials issued an economic pressure warning. Therefore, the chances of rising above this barrier soon are not promising.