3 Reasons Why Bitcoin Is Struggling to Hold $64,500

Bitcoin rose 8.2% in the seven days through September 25, rising from $59,886 to $64,816, but the $64,500 resistance level proved more difficult than expected. Weak macroeconomic data reduced investors’ risk appetite, but other factors also contributed to triggering the Bitcoin price correction on September 25.

Fears of a recession are affecting investor sentiment

According to Yahoo Finance, the median price of a new home in the U.S. fell 4.6% year over year in August, the fastest pace of price growth since early 2022. Home prices have now fallen for seven straight months, marking the longest decline since 2009. Notably, housing inventory remains near record highs, with 467,000 completed homes currently available for sale.

Another area of ​​concern for global investors comes from China, where the central bank announced interest rate cuts and introduced $142 billion in credit lines for individuals and businesses. Analysts at Nomura said these measures were “not enough to prevent a worsening recession,” adding that “fiscal measures are the top priority,” but they believe these measures are unlikely to happen, according to Yahoo Finance.

On September 24, after the U.S. market closed, Warren Buffett-led Berkshire Hathaway announced that it was further reducing its stake in Bank of America, after total revenues of $8.9 billion in less than three months. The move added to concerns in financial markets as the S&P 500 hit a record high on September 25. Bitcoin traders are wary that a potential correction in the stock market could negatively impact the performance of cryptocurrencies.

Concerns grow over US presidential election and potential stock market bubble

In addition to concerns about a global economic slowdown, Bitcoin (BTC) investors are keeping a close eye on the upcoming U.S. presidential election, with Democratic candidate Vice President Kamala Harris in the spotlight. Alex Svanevik, CEO of blockchain analytics platform Nansen, said the Democratic Party has created a “relatively hostile environment for cryptocurrencies.” He expects Harris to continue the current administration’s crypto policies, which are seen as less supportive of industry development in the U.S.

Some Bitcoin bulls are hoping that Republican candidate and former President Donald Trump will win the election. Trump has championed Bitcoin miners as part of his campaign and even spoke at the Bitcoin 2024 conference in Nashville, Tennessee. Trump was recently spotted at a New York City bar and restaurant known to accept Bitcoin, where he handed out burgers purchased with BTC.

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With the outcome of the US presidential election still uncertain, Bitcoin traders are taking a cautious stance as BTC prices approach their highest levels since August. This sentiment is reflected in the subdued behavior of traders using leverage. Futures premiums (a key indicator for Bitcoin derivatives) show a lack of enthusiasm for betting on further price gains in recent weeks.

Due to the long settlement period, monthly contracts should trade at a premium of 5% to 10% per annum under normal market conditions. Anything below this range is often considered bearish, as crypto traders tend to be inherently bullish.

Since September 2, the Bitcoin futures premium has hovered around a neutral 6%, indicating a lack of confidence among bulls. On July 30, the BTC futures premium surged to 11% following a three-week 25% price rally. This suggests that sentiment in the derivatives market remained flat despite Bitcoin’s 20% gain between September 6 and September 24.

As of now, Bitcoin’s underperformance on September 25 could be attributed to weak macroeconomic data, concerns about a stock market correction, and uncertainty surrounding the impact of the U.S. presidential election on the cryptocurrency market.