Profit-Taking Breaks the Present Upward Bitcoin Price Trajectory

The previous week allowed the bitcoin network to climb to its record value of over 61,000 USD. That signaled the return of the bull run that began in full strength this year but stalled at the end of February. Over the previous weekend, the price of nearly 65,000 or beyond it seemed more than possible. But, BTC token price began quickly losing altitude on Monday. The price of the BTC dropped to below 55,000 USD and the future outlook seems not that stable. 

In the coming days, the price will surely continue to swing up and down, mimicking the present strange influx of news and influences. These are, like so often, directly contradictory and paint a picture that can be both optimistic and pessimist, depending on how one perceives the different elements. However, a range of facts still remain in play and these will define the future course of this crypto token but also the rest of the cryptocurrency domain, at least in the short to medium term.

Lost Foothold Opportunity

The main reason that the prices slid, at least from a technical perspective of market trading is the inability of the bulls to create a stable foothold stove 60,000 USD. The same foothold was not formed either at the upper 50,000 range, which allowed the price to drop on Monday to 54,000 USD. Short-term drops further down will likely take place in the coming week. However, the analysts believe that there is a crucial reason that foothold did not materialize. 

That reason is the institutional investment level. More precisely, it is the stagnation of the institutional investment during the initial growth of the price that was sudden and in many ways, unexpected. However, the problem for keeping onto the 60,000 USD foothold came about because the institution did not pour in additional funds once they saw that the price is climbing and opening up the road towards 70,000 USD.

Cool Coinbase Pro Accounts

Presently, Coinbase is the prime location for any US-based company that might want to invest money into the cryptocurrency domain. That includes their corporate Coinbase Pro accounts, which cater directly to these clients. In the previous couple of months, these were red-hot as many companies, big and small, decided to take some of their liquid funds and place them into crypto, mainly bitcoin BTC tokens. The same process included over a billion USD from Tesla Motors and repeated purchases from MicroStrategy that also ended up being over one billion USD. 

These two companies alone pushed a spectacular amount of money into the crypto domain. In the world of esports, social media, and video streaming platforms, such developments continue to be a huge magnet for public attention. However, the downside of the same process is that their absence will also attract attention. That means that the public and analysts now expect institutional investment as not a welcome bonus, but an established norm. If the same investment is not there, the same analysts will likely decide that something is not right. The news media will then pick up on the same story and spread it further. 

The same happened recently when it became clear that the Coinbase Pro accounts are in the flat-to-negative state, showing no major heating up of the spread between BTC and USD pairs. Besides Coinbase, the same trend was visible on Binance, another major digital currency exchange. In the previous such instance, the same corporate accounts exhibited a positive spread which signaled high demand from investors operating with a lot of available fiat cash for crypto purchases. That spread continues to be flat or marginally positive, showing a weak demand from the institutions. 

Bearish Space

Because of the instability in the institutional domain, the cryptocurrency space slid into a sideways territory with a lot of short-term bearish potential. The thing that will signal the escape from that space is the heating up of the institutional demand. Presently, the fact that many investors simply decided to take out profits and not drop a lot of assets is a good sign. So far, most whale BTC addresses that hold 1,000 or more bitcoin tokens remain relatively docile. 

That includes accounts that could move millions of USD worth of  BTC without taking too much future damage even if the prices come back to bull trajectory very fast. But, all of them remain stable and not in a state where they are quickly dumping assets so that they can get their hand on fiat currencies. Right now, that option is still apparently the losing possibility, mainly because of the threat of inflation, especially in the US, where the stimulus package should be inbound to most households in a matter of days, bringing billions of USD of liquidity that will quickly enter the markets. 

Long-Term Dangers

Underlying the price pullback in crypto is another story that could have a lot more serious and long-term implications. That is the story of the Indian government’s desire to ban cryptocurrencies in the country completely. That would be a major hit for the crypto ecosystem that could have a very damaging potential not just in Asia but across the world. The Indian government has already shown time and time again that it has a very antagonistic attitude towards crypto and its banks presently cannot work with any digital exchanges. 

However, the present ban proposal, at least according to rumors, would include a drastic legal penalty not just for business dealings as a company inside of the crypto sphere, but only as personal holdings of the same digital assets. That would mean a criminal charge for all those who hold any kind of digital token in India. Unsurprisingly, that has many spooked right now and not just in the Asain nation. Overall, the threat of legal and regulatory action is a major if not the only huge hurdle for the future potential of cryptocurrency expansion. Presently, the profit-taking and lackluster institutional investment are behind the present price slump. However, news like that from India but from other nations as well could make the present fall in price seem very mild.

Source: Coindesk