The Bitcoin Monthly: July 2023
In its recent report, Ark Invest analyzes the current state and potential future of Bitcoin’s price. The report highlights striking similarities to patterns observed in 2017, suggesting a significant change may be on the horizon. However, it also reveals a concerning 4.1% drop in BTC, the lowest in six years for a month. Investors are left questioning whether this is a bull run or a bull trap.
David Puell’s Observations
– Low Volatility: Bitcoin has experienced relatively low volatility over the past 90 days, similar to levels seen in 2017. This could indicate a period of increased activity, although the direction of price movement remains uncertain.
– Miner Dynamics: The decrease in hash rate, known as miner capitulation, could potentially signal oversold conditions and a bullish reversal. An increase in “liveliness,” reflecting fewer holders selling their coins, is also seen as a positive sign.
– Short-Term-Holder Ratio: The ratio of short-term holders’ profit/loss has historically correlated with trend reversals. This could support a bullish scenario, as the ratio has been linked to local bottoms during bull markets.
External Factors at Play
– Macro Factors: The Federal Reserve’s interest rate hike and potential slowdown in CPI inflation could influence Bitcoin’s appeal as a non-inflationary asset.
– Binance’s Role: The ongoing SEC case against Binance, a major cryptocurrency exchange, could disrupt the market. Binance provides significant liquidity for Bitcoin through its native token, Binance Coin (BNB).
Bitcoin’s Complex Outlook
While the potential signals for Bitcoin’s future growth are positive, regulatory issues and larger economic dynamics complicate the outlook. Bitcoin’s price may be influenced by breaking through the critical resistance at $29,450, which could determine whether it experiences a sustained breakout or continues consolidation.
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