3 Key Factors Preventing Bitcoin from Maintaining $64.5K

Bitcoin experienced a notable increase of 8.2% over the week leading up to September 25, rising from $59,886 to $64,816. However, it encountered a significant obstacle at the $64,500 resistance level, which proved more formidable than anticipated. Alongside weak macroeconomic indicators, several other elements contributed to a downturn in Bitcoin’s price on September 25.

Fear of recession impacts investor sentiment

According to Yahoo Finance, the median price for new homes in the United States dropped by 4.6% in August compared to the previous year. This decline follows a period of rapid price growth that began in early 2022. Home prices have now been on a downward trend for seven consecutive months, marking the longest period of declines since 2009. Meanwhile, housing inventory remains near its peak, with 467,000 completed homes available on the market.

Concerns are also rising on a global scale, particularly in China, where the central bank recently cut interest rates and established a $142 billion credit line for individuals and businesses. Despite these measures, analysts at Nomura believe they are insufficient to halt the ongoing economic slowdown. They suggest that more substantial fiscal policies are required, but doubt that such steps will be taken anytime soon, as reported by Yahoo Finance.

On September 24, after the US markets closed, Warren Buffett’s Berkshire Hathaway announced further reductions in its holdings of Bank of America. The total sales have now reached $8.9 billion in less than three months. This decision has intensified concerns in financial circles, especially as the S&P 500 hit a record high on September 25. Bitcoin traders are concerned that any significant correction in the stock market might have a negative impact on cryptocurrency prices.

US elections and potential stock market bubble amplify concerns

In addition to worries about a global economic slowdown, Bitcoin investors are keeping a close eye on the upcoming US presidential election. Attention is particularly focused on the Democratic Party’s candidate, Vice President Kamala Harris. Alex Svanevik, CEO of blockchain analytics firm Nansen, has noted that the Democrats have created a “relatively hostile environment for crypto.” He expects a Harris presidency to continue current policies that are seen as unsupportive of the cryptocurrency sector in the US.

On the other hand, some Bitcoin enthusiasts are hoping for a win by the Republican candidate, former President Donald Trump. As part of his campaign, Trump has expressed support for Bitcoin miners and even made an appearance at the Bitcoin 2024 conference in Nashville, Tennessee. Recently, he was seen in a New York City establishment known for accepting Bitcoin, where he paid for burgers using BTC.

With the US election outcome still uncertain, Bitcoin traders are proceeding cautiously as the cryptocurrency approaches its highest levels since August. This cautious approach is evident among leveraged traders. According to the futures premium — a key metric in Bitcoin derivatives — there has been little enthusiasm for further price increases in recent weeks.

Under normal market conditions, monthly contracts should have a 5% to 10% annualized premium due to the longer settlement period. Figures below this range are often seen as bearish since crypto traders generally lean toward optimism.

Since September 2, the Bitcoin futures premium has hovered around a neutral 6%, indicating a lack of strong conviction among bullish investors. By contrast, on July 30, the premium surged to 11% following a 25% rally in Bitcoin prices over a three-week period. This suggests that despite Bitcoin’s 20% gains between September 6 and September 24, sentiment in the derivatives market has remained relatively subdued.

Currently, Bitcoin’s disappointing performance on September 25 can be linked to weak macroeconomic data, concerns about a possible stock market correction, and uncertainty regarding how the US presidential election might affect the broader cryptocurrency market.

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