Key indicators show that bulls still have the upper hand, Bitcoin may usher in a recovery

Original title: 5 bullish arguments that Bitcoin price just bottomed at $53K

Original author: Yashu Gola, CoinTelegraph

Original translation: Tao Zhu, Golden Finance

Despite the volatility of Bitcoin prices and the drop to a five-month low, several key indicators suggest that bulls may still have the upper hand, suggesting a possible recovery in Bitcoin price action.

Bullish divergence strengthens BTC rebound prospects

Bitcoin had a turbulent start to the month, plunging more than 10.50% to hover around $57,000 as of July 7. Bitcoin hit a low of $53,550, with its decline mainly due to market concerns about Mt. Gox's continued repayment of more than 140,000 Bitcoins to its customers and the German government's liquidation of Bitcoins leading to a market sell-off.

The latest drop in Bitcoin’s price has been accompanied by a growing gap between falling prices and a rising relative strength index (RSI). Such a gap typically indicates that selling pressure is waning, even as prices continue to fall.

BTC/USD daily price chart. Source: TradingView

From a technical analysis perspective, this situation typically means a possible reversal or slowdown in the current downtrend, suggesting that Bitcoin could soon see a rebound as sentiment turns back bullish.

Bullish Hammer, Oversold RSI

Two other classic technical indicators support the bullish reversal scenario. First, Bitcoin formed a bullish hammer candlestick pattern on July 5, which is characterized by a small upper body, a long lower shadow, and a small upper shadow on the daily candlestick chart. A similar situation was seen in May.

Secondly, Bitcoin’s daily RSI reading hovers around the oversold threshold of 30, which typically signals a period of consolidation or recovery. Analyst Jacob Canfield predicts that the indicator could foreshadow a rebound and BTC could return to “previous highs” above $70,000.

Source: X

Wall Street bets on bigger rate cut in September

Bitcoin’s ability to resume its bull run in the coming weeks has further increased due to the rise in interest rates in September.

As of July 7, Wall Street traders saw a 72% chance of a 25 basis point rate cut by the Federal Reserve, according to data collected by the Chicago Mercantile Exchange. A month ago, the probability was 46.60%.

Probability of target rate for the Federal Reserve meeting on September 18, 2024. Source: CME

Expectations for rate cuts have risen as hiring in the United States has slowed.

When the job market is weak, the Federal Reserve typically considers cutting interest rates to stimulate economic activity. Lower interest rates are generally good for Bitcoin and other riskier assets because they make traditional safe investments such as U.S. Treasuries less attractive.

Bitcoin ETF Investors Return After July’s Drop

Another positive indicator for the BTC market is the resumption of inflows into U.S. spot Bitcoin exchange-traded funds (ETFs) after two days of outflows.

On July 5, when the U.S. released weak unemployment data, these funds attracted a total of $143.1 million worth of BTC, according to Farside Investors, indicating that risk sentiment among Wall Street investors is rising.

Cumulative inflows into spot Bitcoin ETFs. Source: Farside Investors

Fidelity Think Tank’s “Origin Bitcoin Fund” (FBTC) led the way with $117 million in inflows. The Bitwise Bitcoin ETF (BITB) saw net inflows of $30.2 million, while the ARK 21Shares Bitcoin ETF (ARKB) and the VanEck Bitcoin Trust (HODL) recorded inflows of $11.3 million and $12.8 million, respectively.

In contrast, the Grayscale Bitcoin Trust (GBTC) saw net outflows of $28.6 million.

The U.S. money supply is expanding again

More upside clues for Bitcoin come from the recent growth in the U.S. M2 supply, a measure of money supply that includes cash, checking deposits, and easily convertible quasi-money such as savings deposits, money market securities, and other time deposits.

As of May 2024, the M2 money supply has grown by about 0.82% year-over-year, bringing its total decline from a peak of 4.74% in October 2023 to about 3.50%.

U.S. M2 supply chart. Source: FRED

M2 supply growth is good for Bitcoin because it increases liquidity in the economy. The more money in circulation, the more people will invest in riskier assets like Bitcoin because traditional investments like savings and bonds offer lower returns. ...

Bitcoin Miner Capitulation Suggests Bitcoin Price Bottom

The Bitcoin Miner Capitulation Indicator is approaching the levels seen when the market bottomed following the FTX crash in late 2022, suggesting that BTC may have bottomed. Miner capitulation occurs when miners reduce operations or sell a portion of their mined Bitcoin and reserves to make ends meet, earn a profit, or hedge their Bitcoin exposure.

Market analysts have highlighted several signs of capitulation over the past month, during which Bitcoin’s price has fallen from $68,791 to $53,550. One notable sign is a significant drop in Bitcoin’s hash rate, the total computing power securing the Bitcoin network.

The hash rate fell 7.7%, to a four-month low of 576 EH/s after hitting an all-time high on April 27. The decline suggests that some miners are scaling back operations, reflecting financial pressures on the mining community following the halving.

Bitcoin network true hash rate declines. Source: CryptoQuant

As weaker miners exit the market or scale back operations, more competitive miners will see greater profits, potentially stabilizing their operations and reducing the need to sell BTC. These indicators suggest that the Bitcoin market may be near a bottom, similar to previous cycles where miners sold off and reduced operations before the market recovered.

Original link

欢迎加入律动 BlockBeats 官方社群：

Telegram 订阅群： https://t.me/theblockbeats

Telegram 交流群： https://t.me/BlockBeats_App

Twitter 官方账号： https://twitter.com/BlockBeatsAsia