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| By Bruce Ng |
Over the past three weeks, Bitcoin (BTC, “A-”) traded sideways.
You see, sideways action for Bitcoin typically means money is flowing to higher risk cryptos, like altcoins. This usually causes BTC dominance, or BTC.D, to drop.
Oddly enough, this did not happen. In fact, BTC.D has held steady over the past week.
So, what’s Bitcoin’s outlook in the near term?
Well, first, let’s look at derivatives to get a better idea of the situation:
On July 7, $1 billion of open interest was wiped out. This caused BTC to drop a bit below $30,000 briefly, but the price recovered shortly after.
However, it’s important to note that OI is still quite high — the highest it has ever been since October 2022. So, we are still in precarious territory.
Going forward, I believe there are three main scenarios that could play out in the near future.
First, if we get a major liquidation event, $28,000 is likely the next level of support. This is a likelier scenario than the following one.
Second, if there is no liquidation event, prices will continue to climb. This will be driven by spot volume into the $35,000 region.
Third, if BTC continues to trade sideways, money will flow to altcoins. Now, ETH/BTC — the ratio of Ethereum’s (ETH, “B”) price to Bitcoin’s price — is still below its multi-month trendline. And with rumors of an Ethereum exchange-traded fund surfacing, ETH/BTC and alts could rally.
At this point, the rumors about an Ethereum ETF are purely speculation. However, if the recent Bitcoin ETF filings from industry giants like BlackRock (BLK) prove to be successful, an ETH ETF could potentially piggyback off that success.
In any case, the short-term price action is less important than the bigger, long-term picture. If you’re interested in finding out which quality alts can be held for the long term, I recommend checking out my colleague Juan Villaverde’s Weiss Crypto Portfolio.
I’ll be back next week with more market updates, so stay tuned.
Best,
Bruce
