Bitcoin drops below ‘critical’ level for avoiding a return to $31K — gold rises on inflation data

Bitcoin looked ready to hit $31,000 per coin on Monday, but it dropped below that level and has not been able to recover. That has now sent the price of gold to a three-months high, and financial markets around the world are watching the coin closely.

The price of Bitcoin has dropped below a ‘critical’ level — between $3,000 and $3,500 — that suggests a return to the $3,100 level is possible. This is a bad thing because it will keep Bitcoin from getting any further up. Despite this, the price of gold has risen today on reports of inflation data that indicate that the Reserve Bank of Australia is likely to keep inflation rates subdued.

Bitcoin (BTC) fell to support which could determine a $30,000 retest on July 13 as bulls failed to make their case for fresh gains.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Bitcoin bulls see $33,000 slip away

Data from Cointelegraph Markets Pro and TradingView showed another lackluster performance for BTC/USD on Tuesday, with local lows at $32,240 on Bitstamp.

Ranging above $33,000, viewed as the support level to hold as a springboard for bullish continuation, seemed shaky at best this week. Monday saw a brief slip below, with the rebound barely holding out for 18 hours.

At the time of writing, $32,500 formed a focus, with Bitcoin bouncing below levels one trader says are necessary to hold in order to prevent a return to closer to $31,000.

“The critical support that I’ve derived here is the area around $32,600-$32,900, which you preferably want to see sustain as support to avoid another test of the lows,” Michaël van de Poppe explained in an update earlier on Tuesday.

With that area missing for now, bearish sentiment looked apt to prevail on lower timeframes.

Fellow trader Crypto Ed even tweeted charts comparing current price action with the build-up to Bitcoin’s bear market capitulation event in December 2018, when it dropped to just $3,100.

c’mon bulls, give me reasons why this time it’s [email protected] ‘s chart #blameMooni pic.twitter.com/W90xoAAl7y

— Crypto_Ed_NL (@Crypto_Ed_NL) July 13, 2021

That said, fundamentals continued to stabilize after seeing local bottoms of their own. The hash rate was above 91 exahashes per second on the day, while difficulty continued to avert a fresh record-breaking drop at this weekend’s readjustment.

Prospective U.S. Bitcoin ETF gets banking support

Elsewhere, news that BNY Mellon would be providing banking services for a potential Bitcoin exchange-traded fund (ETF) from Grayscale failed to lift the mood.

Related: Strong Bitcoin accumulation spotted as BTC price refuses to fall below $30K

A United States ETF has yet to get the regulatory go-ahead, with a total of 1 currently under the microscope.

Even if it were to launch, however, opinions are mixed about an ETF’s impact on Bitcoin if it were to operate in such a large market.

Noting the impact of a U.S. ETF launch on gold in 2005, however, popular Twitter commentator Lark Davis hinted that the direction would be clear.

“It essentially kick started a 7 year bull run,” he summarized.

Tuesday’s forthcoming release of the July consumer price index report, which focuses on inflation, buoyed stocks in contrast to crypto markets. Gold rose in tandem, with XAU/USD up 0.7% at $1,813.

BTC/USD (blue) vs. XAU/USD (orange) 1-hour line chart. Source: TradingView

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