South African investors have been keeping a close eye on the evolving cryptocurrency market, particularly Wrapped Bitcoin (WBTC). WBTC has enjoyed an upswing in price since mid-June, following the announcement of BlackRock filing for a Bitcoin Spot ETF. This sent the cryptocurrency up by approximately 29%, moving away from the ZAR 431,750 support level.
However, post upsurge, Wrapped Bitcoin found itself ensnared within a consolidation zone between ZAR 514,666 and ZAR 544,515. Despite the market’s best efforts, it couldn’t close above ZAR 552,840. This consolidation phase extended for over a month. Of recent note is the July 23rd candle which closed below ZAR 518,310, hinting at a potential bearish turn. The following day, July 24, this bearish trend took hold and brought down the support level of ZAR 514,666.
Reasons behind the Wrapped Bitcoin Drop
The drop in WBTC price can be traced to a surge in BTC inflows to centralized exchanges. On July 24th, BTC whale exchange inflows reached a yearly high, accounting for over 40% of the total volume, affecting the WBTC price adversely.
A substantial net inflow of deposits to a centralized exchange typically suggests an increase in selling pressure, often leading to a dip in price.
Recently, Wrapped Bitcoin formed support at ZAR 502,791 and attempted a bounce back, but faced rejection at the ZAR 512,840 level. The inability of the past candle to close above ZAR 509,355 suggests that bears are holding strong. If they push the price below ZAR 502,791, the value could potentially drop to around ZAR 488,991, marking a 2.84% decrease.
A significant development took place on July 26 when a crypto whale offloaded 150 Wrapped Bitcoin, equivalent to approximately ZAR 75,383,400, as reported by blockchain tracker, Lookonchain.
Wrapped Bitcoin currently boasts a market capitalization increase of 0.02%, equating to approximately ZAR 81,770,600,099. Its 24-hour trading volume has also risen by 38.82%. While the price has fallen 56.28% from its all-time high of ZAR 1,156,890, it is up 799.82% from its all-time low of ZAR 57,542.
Will WBTC Price Fall Further?
Cryptocurrency technical indicators suggest a possible bearish turn for the WBTC. The price has slipped below both the 20 and 50-day Exponential Moving Averages (EMAs), hinting at a rise in bearish momentum. The Chaikin Money Flow (CMF) score has taken a sharp downward turn to -0.30, indicating a withdrawal of capital from the market and a strong bearish signal. The CMF has been trading below the 0 mark since July 20.
Adding to this, the Relative Strength Index (RSI) has dropped below the 50 level and currently trades at 44.80, further suggesting bearish momentum in the price. Volatility indicators, like the Bollinger bands, have also started to widen, signaling increased market volatility.
The WBTC price appears to be moving towards the lower Bollinger band, currently at ZAR 497,062, after facing rejection from the 20-day Simple Moving Average (SMA) of the Bollinger Bands.
In light of these dynamics, South African investors will need to stay on their toes and closely monitor market trends and signals as they navigate the evolving landscape of cryptocurrency investments.
*All currencies in the article have been converted to South African Rand ZAR