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Futures Weekly Wrap (July 12th-19th): Bitcoin Falls to a 3-Week Low - Will the $30,000 Level Hold or Give Way?
Binance Future
2021-07-19 07:20
Bearish sentiments continue to weigh on Bitcoin after the cryptocurrency failed to breach $35,000 last week. Bitcoin bears remain the dominant force as they drove BTC’s prices south to a new three-week low. Bitcoin’s price fell to a low of $31,000 in the past week, its lowest price point in July.
With the bears still looming, the crypto market is in dire need of a fresh catalyst to surpass this range and create a new upswing. Without catalysts, Bitcoin may see a more pronounced sell-off or a continued consolidation within the $30,000 to $40,000 range.
As of Monday morning (UTC+8), Bitcoin is changing hands at $31,676, down almost 7.5% on a 7-day rolling basis.
Source: TradingView
The latest sell-off pushed Bitcoin towards the lower half of the $30,000 to $40,000 range, indicating a lack of demand to trade at higher levels. Due to this weak demand, BTC’s price has been pinned under all three key moving averages. Notably, the price of Bitcoin has stayed below the 20-day exponential moving average since July 12th, indicating that selling pressure is still in full force. Thus, if bears continue to dominate market activity, Bitcoin will likely revisit the $30,000 support level.
The $36,600 resistance level remains the key area to watch for any signs of a trend breakout. Investors should also keep a close eye on the 20-day exponential moving average for a change in short-term sentiment; a clear breakout above the 20-EMA would signal buyers’ intention to push Bitcoin towards the $36,000 region.
In the derivatives market, BTC funding rates on Binance remain stagnated with occasional dips into negative territory. This is indicative of the weak demand for leveraged long positions as prices continue to decline slowly.
Source: Binance Future
Historically, crypto funding rates tend to correlate with the general trend of the underlying asset. For example, in bull markets, funding rates tend to increase due to strong demand for leveraged long positions. Conversely, funding rates decline in bear markets as supply exceeds demand.
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Altcoins have suffered the same fate in the past week. Ethereum (ETH), the second-largest cryptocurrency by market capitalization, declined 11% over the past week to hit $1,886 on Monday morning (UTC+8).
Source: TradingView
ETH has once again fallen below the 200-day Exponential Moving Average (EMA) and the $2,000 support line. Since the May 19th collapse, the price of ETH has probed below the 200-day EMA on three occasions. The first occurred on May 23rd when ETH dropped as much as 26% and briefly traded below the 200-day EMA. The second occurrence was on June 21st, when prices dropped almost 16% and remained below the 200-day EMA for seven consecutive days before rebounding. The third was its most recent sell-off on July 13th, when prices fell more than 4% and remained below the moving average for almost a week. Notably, the most recent sell-off was not as severe as prior ones, indicating waning selling pressure.
ETH seems to be forming a symmetrical triangular formation on the daily chart, indicating investor uncertainty about the cryptocurrency's future path. With the bottom limit of the chart pattern currently supporting prices, ETH may go to the upside for a short-term trend reversal.
This reversal should see Ethereum breach the $2,000 barrier level, which also happens to coincide with the 200-day EMA. If Ethereum price can hold the level mentioned above as support, ETH bulls may anticipate the cryptocurrency aiming for the top border of the symmetrical triangle at $2,284, which corresponds to the 50-day EMA.
Similar to BTC funding rate trends, funding rates for ETH contracts have remained extremely low, averaging at 0.01% on most days. The funding rate can act as a measure of the sentiment of traders towards the market. When funding rates turn negative, it broadly indicates that investors’ sentiment is negative since traders are paying a premium to keep open short positions.
Source: Binance Future
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Disclaimer: The information provided in this section doesn't represent any investment tips or Binance's official position.