After a busy July where macro factors provided significant volatility, BTC’s price action managed to deliver both a weekly and monthly candlestick in favor of the bulls.
The road to some form of recovery continues and, at some points in recent weeks, it looked like Bitcoin would suffer even harder from June’s 40% losses.
Now, however, there is already a sense of optimism among analysts, but one thing remains clear: this “bull market rally” does not yet mean the end of the tunnel.
As summer 2022 enters its final month, Cointelegraph takes a look at the potential market triggers at play for Bitcoin as it lingers near the highest levels since mid-June.
The spot price resumes the trend lines of the bear market
In terms of Bitcoin’s July performance, things could have been a lot worse.
After June posted losses of nearly 40%, BTC / USD managed to close last month with respectable gains of 16.8%, according to data from the Coinglass analytics resource.
While those gains at one point exceeded 20%, the July tally still remains Bitcoin’s best since October 2021, before the last all-time high of $ 69,000 hit.
With solid foundations in place, the question among analysts now is whether and for how long the party can continue.
Fun day!
At close D, W, M, BTC closes D red. W&M closed green and Trend Precognition launched a new Long on M. It is uncertain until the close of the candle, but the fact that it closed above the 50-month moving average makes it attractive. Time to relax. Back to the charts in the morning. pic.twitter.com/ImWjNcXx91
– Material indicators (@MI_Algos) 1 August 2022
“First monthly close in green since March”, the famous trader and analyst Josh Rager he answered:
“After the monthly close above the 2017 all-time high of the last cycle, the price is slowly rising. So far it looks good and even though this is a “bear market”, I am happy to buy dips right now. “
Others were more cautious, including fellow Crypto trader and analyst Tony, who noted that recent local highs just above $ 24,000 were still acting as an unchallenged resistance that day.
“I am looking for a break from this Bitcoin pattern and remain short while we are below the $ 24,000 offering zone that we have turned down,” he said. confirmed to Twitter followers.
However, the weekly and monthly close sealed some important support levels for Bitcoin. Notably, the 200-week moving average was reversed by resistance on the weekly chart and BTC / USD held the realized price, as data from Cointelegraph Markets Pro and TradingView show.
In its latest weekly newsletter released last week, blockchain infrastructure and cryptocurrency mining firm Blockware also noted that a 180-period exponential hull moving average (EHMA) recovery to just under $ 22,000 on the monthly chart would be “enough. bullish “.
“It also appears that Monthly is claiming its 180-week EHMA, a level we’ve been talking about in recent months as a macro accumulation area for BTC. This also closes the EST on Sunday evening, “wrote William Clemente, principal insights analyst:
“If it does claim, it would be quite bullish as failures / failures are a strong signal.”
Macro triggers are cold for August
The macro picture for the beginning of August is one of relief mixed with a sense of mistrust of how the rest of the year could play out.
In the short term, US equities survived last month’s Federal Reserve-induced volatility to late July highs. As Cointelegraph previously reported, demands for a sustained rally in stocks are on the rise, something that may just be good news for highly correlated cryptocurrency markets.
Analyzing the state of commodities, meanwhile, the popular Game of Trades Twitter account predicted that oil would soon lose ground and that this would have a large impact on US inflation.
Currently at its highest in more than forty years, the consumer price index (CPI) is responsible for the Fed rate hikes that have put pressure on risk assets across the board. A turnaround in inflation and hence in Fed policy could therefore quickly turn the tide.
“Big sellers stepped in for oil on Friday,” a weekend post light:
“It looks like the oil is ready for failure, taking the IPC with it.”
Brent crude oil prices plummet as the West eases efforts to curtail Russian #oil trading with#inflation and energy risks increase. The plan to exclude Moscow from the maritime insurance market has been delayed. https://t.co/fwQPGft0Uc pic.twitter.com/44Lne5P7qT
– Holger Zschaepitz (@Schuldensuehner) 1 August 2022
The global picture when it comes to commodities is not that simple, however, with macro analyst Alex Krueger warning to the contrary that the energy crisis in Europe has not yet manifested itself in market prices.
For Bitcoin, therefore, the current recovery is more of a “bear market rally” than a true return to strength.
“Yes, this is a bear market rally … for now,” Krueger he wrote:
“The fact is that if inflation falls fast enough, which is doable, and the energy crisis in Europe is not exacerbated by a harsh winter, even possible, this could end up being the start of the bull market. Nobody knows until now “.
Krueger added that the status quo should remain “at least until the end of August” when new Fed events impact the market.
In order of importance, he listed the September key rate decision, the September CPI, the Fed’s Jackson Hole summit on August 25, and the press of the August 10 CPI for July.
The most important events scheduled, in order:
# 1 Sep 22: FOMC
# 2 September 13: IPC
# 3 August 25: Jackson Hole
# 4 Aug 10: CPIExpect the markets to reduce risk (sell off) the days before each event if the market is running into them.
Then of course we have the infamous ETH merger around September 19th.
– Alex Krüger (@krugermacro) July 30, 2022
Turning to the strength of the US dollar, the US dollar index (DXY) remained at lows not seen in nearly a month, currently below 106.
For Game of Trades, the index was more significant than the numbers. Following its parabolic uptrend, a clear change of direction was now visible on the daily DXY chart.
“DXY broke his dish. There is only one way a broken parable ends, “he says commented.
RSI raises doubts about the minimum price
Turning to on-chain signals, a rebound in one of Bitcoin’s fundamental fundamentals was not enough to convince Venturefounder analyst that BTC’s low price is on the way.
Zoom out Taking a multi-year view and comparing BTC / USD across market cycles, the popular content creator said Bitcoin’s Relative Strength Index (DXY) is still suppressed after its peak in April 2021.
The RSI measures how much BTC / USD is overbought or oversold at a certain price, and has been on its lowest readings ever since May.
Despite suggesting that bitcoin is trading below its fair value, RSI has not yet regained the “bullish momentum” that characterized the run above $ 20,000 and beyond at the end of 2020.
In April 2021, Bitcoin reached $ 58,000 before halving by the end of July.
“The only way to see the July 2022 low as the cycle low is if you were to see the April 2021 high as the cycle high for this cycle,” Venturefounder said:
“Bitcoin and Altcoin RSI and bullish momentum peaked in April 2021 and never recovered for the remainder of this cycle. Do you think we’ve hit bottom?”
Another conspicuous period of oversold in RSI came shortly after the COVID-19 crash in March 2020. had a significant impact on price strength in the latest block subsidy halving.
BTC / USD, of course, has never looked back, claiming its all-time high about six months later.
Purpose The ETF finally adds to the holdings
Things could improve for Bitcoin’s institutional involvement as subtle signs of recovery show up in the statistics.
The latest such signal comes from the world’s first Bitcoin spot price ETF (ETF), the Purpose Bitcoin ETF.
After its holdings suddenly dropped by 50% in June, the product is finally adding BTC again, suggesting that demand is no longer falling.
The purpose added 2,600 BTC, something commentator Jan Wuestenfeld further noted that ended several weeks of hibernation.
“Assets under management, however, are still far from an all-time high,” he said added.
However, the upturn is far from omnipresent. A look at the Grayscale Bitcoin Trust (GBTC) continues the troubled trend of lack of demand.
The fund’s premium at the spot price, which has long been a discount, is now hitting historic lows of nearly 35%, Coinglass data confirms.
Grayscale continues legal action against US regulators for their refusal to allow the launch of a spot ETF on Bitcoin on the domestic market. GBTC would be converted to such an ETF when conditions allowed.
New month, new fear
It has been a good run, but the cryptocurrency market sentiment is already back in the “fear” zone.
Related: Top 5 Cryptocurrencies To Watch This Week: BTC, BNB, UNI, FIL, THETA
The latest Crypto Fear & Greed Index readings confirm that “neutral” sentiment could barely last a day and that despite high prices prevailing cold feet are hard to shake.
The index measures 33/100 as of August 1, still high compared to the last few months but already considerably below the highs of 42/100 seen a few days ago.
For the research company Santiment, however, there remains a reason for optimism. The company’s proprietary metric governing transaction volume versus overall network value for Bitcoin ended in July in “neutral” territory per se.
The Value to Transaction (NVT) network token circulation pattern, after printing bullish divergences in May and June, has therefore reached its last monthly close.
“With a neutral signal now that prices have risen and token circulation has declined slightly, August can move in both directions,” Santiment summed up in a Twitter update on the latest numbers.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move carries risk, you should conduct your research when making a decision.