Bitcoin's Price Appears To Have Found A Bottom Around $53,000

Despite Bitcoin's price volatility and recent five-month lows, bullish divergence on the price chart, prospects of a September rate cut, and increasing M2 supply are catalysts that could reignite the Bitcoin bull market cycle.

Source: www.innova.com.tr

Several key indicators suggest that despite recent setbacks, the bulls might still hold sway, pointing towards a potential resurgence in BTC price momentum.

Bullish Divergence Enhances BTC's Rebound Prospects

Bitcoin started the month on a turbulent note, dropping more than 10.50% to settle around $57,000 as of July 7th. At its lowest point, BTC reached $53,550, driven by concerns of a market sell-off stemming from Mt. Gox's ongoing distribution of over 140,000 BTC to its creditors and the German government's Bitcoin liquidations.

The recent decline in Bitcoin's price coincided with an increasing divergence between falling prices and a rising Relative Strength Index (RSI). This divergence typically suggests that the selling pressure is weakening, despite the ongoing price decline. In technical analysis, such a scenario often indicates a potential reversal or a slowdown in the current downtrend, hinting that Bitcoin could be poised for a rebound as market sentiment shifts towards a more bullish outlook.

The Bullish Hammer and Oversold RSI Signal Potential for a Price Reversal

Two other classic technical indicators support the bullish reversal scenario. On July 5, Bitcoin formed a bullish hammer candlestick pattern, featuring a small body at the upper end of the daily candle, a long lower shadow, and a minimal upper shadow. A similar pattern was observed in May. Additionally, Bitcoin's daily RSI is currently near its oversold threshold of 30, a level that typically precedes a period of consolidation or recovery. Analyst Jacob Canfield suggests that this indicator could indicate a rebound, potentially pushing BTC back toward its previous high of over $70,000.

Wall Street Anticipates September Rate Cut Boost

Bitcoin's potential to continue its bullish trend in the coming weeks has grown, driven by increasing expectations of a rate cut in September. As of July 7, data from the CME indicates that Wall Street traders estimate a 72% chance of the Federal Reserve cutting interest rates by 25 basis points, up from 46.60% a month ago. This shift in expectations is due to a slowdown in U.S. hiring, which often prompts the Fed to consider rate cuts to stimulate economic activity. Lower interest rates are generally bullish for Bitcoin and other riskier assets as they make traditional safe investments like U.S. Treasury notes are less appealing.

Return of Bitcoin ETF Investors Following July Dip

This marked another bullish indicator for the BTC market as inflows into the U.S.-based Spot Bitcoin ETFs resumed following two consecutive days of outflows. On July 5, coinciding with the release of weak U.S. unemployment data, these funds collectively attracted $143.10 million worth of BTC, signaling increased risk appetite among Wall Street investors, according to Farside Investors. Leading the inflows was the Fidelity Wise Origin Bitcoin Fund (FBTC) with $117 million, followed by the Bitwise Bitcoin ETF (BITB) with $30.2 million. The ARK 21Shares Bitcoin ETF (ARKB) and the VanEck Bitcoin Trust (HODL) also saw inflows of $11.3 million and $12.8 million, respectively. In contrast, the Grayscale Bitcoin Trust (GBTC) experienced a net outflow of $28.6 million.

Bitcoin Miner Capitulation Suggests Potential BTC Price Bottom

Metrics indicating Bitcoin miner capitulation are approaching levels seen during the market bottom after the FTX crash in late 2022 which suggests a possible bottom for BTC. Miner capitulation happens when miners cut back operations or sell some of their mined Bitcoin and reserves to stay viable, earn yield, or hedge against Bitcoin exposure. Over the past month, market analysts have noted several signs of capitulation as Bitcoin’s price dropped from $68,791 to a low of $53,550. A key indicator is the significant decline in Bitcoin’s hashrate — the total computational power securing the Bitcoin network. The hashrate has decreased by 7.7%, hitting a four-month low of 576 EH/s after reaching a record high on April 27. This drop implies that some miners are reducing operations, reflecting the financial strain within the mining sector post-halving. As weaker miners leave the market or scale back, more competitive miners may see increased profits, potentially stabilizing their operations and reducing the need to sell BTC. These metrics suggest that the Bitcoin market could be nearing its bottom, akin to previous cycles where miner sell-offs and operational cutbacks preceded market recoveries.

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