Bitcoin (BTC) rose 4.5% from June 28 to July 1, breaking the $63,000 resistance level for the first time in a week. The previous decline was mainly due to concerns over the German government’s BTC trading with exchanges and concerns that Mt. Gox creditors would sell large amounts of Bitcoin during the bankruptcy process. However, this downtrend was reversed by three major factors, including the entry of new major investors into the market.
Bitcoin FUD Transfers After Michael Dell Post and Spot ETF Inflows
According to a report by on-chain analytics firm Arkham Intelligence, on July 1, the German government transferred 1,500 BTC, worth $95 million, to various cryptocurrency exchanges. Similarly, the US government transferred 1,184 BTC from a wallet linked to the seized funds prior to June 30. The German government currently holds $2.8 billion worth of Bitcoin assets, acquired primarily from a closed movie piracy site that was shut down in 2013.
The trading has fueled speculation that selling pressure could continue, as the U.S. government also holds $13.4 billion worth of bitcoin in its wallets, according to data from Arkham Intelligence. The U.S. government’s most significant recent transaction occurred on June 26, when it sent 3,940 BTC, worth $214 million at the time, to a Coinbase Prime account. The funds were seized from convicted drug trafficker Banmeet Singh in early 2024.
Despite the government sales of over $300 million, the Bitcoin price has shown resilience. This resilience was reinforced when spot Bitcoin exchange-traded funds (ETFs) absorbed part of the offering, adding a net $137 million in just four trading days from June 25 to June 28. The new major players joining the Bitcoin ecosystem have bolstered investor confidence.
Billionaire Michael Dell, founder and CEO of Dell Technologies, created excitement on June 21 with a suggestive message about the possibility of investing in Bitcoin. Dell, who was named one of the 20 richest people in the world by Forbes, posted a meme featuring Cookie Monster clutching a cookie shaped like Bitcoin. Bitcoin Layer analyst Joe Consorti highlighted that Dell’s company has $5.83 billion in cash and cash equivalents.
On July 1, Sony’s Tokyo subsidiary Amber Japan changed its name to S.BLOX to focus on cryptocurrency trading. The company emphasized that the goal of the update is to increase user-friendliness and expand functionality. S.BLOX, a member of the Japan Virtual Currency Exchange Association (JVCEA), has a capital of $10.5 billion, according to its latest financial report. Sony Corporation had cash and cash equivalents of $11.8 billion as of March 2024.
As tech stock valuations become inflated, demand for alternative assets, including BTC, increases.
The improving outlook for Bitcoin among some investors stems from concerns that U.S. technology stocks have reached overly high valuations as second-quarter revenue expectations may fall short. Yahoo Finance reports that Nvidia’s “extraordinarily steep” expected sales multiple is 21x, up from 12x just two months ago, according to research conducted by Creative Planning’s Charlie Bilello. For reference, Microsoft has 12x projected sales and Apple has 8x.
Related: History shows Bitcoin is primed for a rally in July.
Analysts also expect Tesla’s second-quarter revenue to drop 3.7% due to fierce competition in China and a lack of affordable new cars, Yahoo Finance reports. The electric car company is due to report earnings on July 2. In early 2024, CEO Elon Musk canceled plans for a new, affordable electric car, sparking some concerns. Tesla’s stock has fallen 15.5% since the beginning of the year.
In short, the rising demand for Bitcoin reflects investor dissatisfaction with the valuation of traditional market assets such as stocks and real estate. The S&P 500 hit a record high on June 28, with gains concentrated primarily in a few technology stocks. Meanwhile, the average price of a new single-family home in the U.S. fell to a six-month low in May.
These dynamics help explain why the fears, uncertainties and doubts surrounding the US and German government’s Bitcoin dealings have subsided, paving the way for a rally above $63,000.
This article does not contain investment advice or recommendations. All investing and trading moves involve risk, and readers should conduct their own research when making any decisions.