Bitcoin (BTC) continued its bullish trend on July 13, bouncing off its five-month low, with the cryptocurrency up about 1.70% on the day to trade at $58,885.
Some of the key factors driving this rebound include: the German government selling off its nearly 70,000 BTC holdings, and the US dollar weakening amid a growing deficit.
Bitcoin investors absorbed about $2.5 billion.
The German government is left with around 9,100 BTC after selling off $2.5 billion worth of BTC since June 17. During this period, the Bitcoin price fell by around 12.70%, before making a notable recovery of over 10% over the past 8 days.
In contrast, institutional investors are buying Bitcoin when it is partially down, according to Cahue Oliveira, an analyst at on-chain data service CryptoQuant.
In a July 11 post on the Quicktake blog, Oliveira noted that wallet balances of 1,000 to 10,000 BTC had been growing rapidly since early June, including during a period when the German government was selling off its BTC.
In particular, this group added over 10,000 BTC worth $5.7 billion during this period, which coincided with a 23% price drop in BTC. This raised expectations that so-called “whales” were buying Bitcoin when it fell below $60,000.
“While many novice investors capitulated last week, particularly those who bought the coin 1-3 months ago, institutional investors participated in the largest accumulation since March,” Oliveira summarized.
The data suggests that Bitcoin could bottom near its recent market low of $56,700.
Dollar falls to lowest level in a month
Bitcoin’s today and recent uptrend coincides with the bearish trend seen on the US Dollar Index (DXY) chart.
In particular, the DXY, a gauge of the dollar’s strength against a basket of major currencies, fell 0.90% in a week to around 104 on July 12, its lowest level in about five weeks. The decline was due to bond traders increasing their bets on a rate cut in September.
DXY faced additional downward pressure due to the prospect of a rising US government deficit, which has reached $1.27 trillion since the beginning of the year through June.
Lower interest rates and larger fiscal deficits could weaken the dollar, as borrowing increases and concerns about the government’s fiscal health grow, diluting the value of the currency.
Typically, when currency prices are cheap, investors seek returns in riskier assets, including stocks and cryptocurrencies.
Related: Bitcoin Price Will Reach $330,000 This Bullish Cycle – Analyst
This explains why Bitcoin is rallying again despite growing concerns over the German government’s BTC dump and the ongoing refund of over 140,000 BTC to Mt. Gox customers.
BTC Price Technical Rebound?
From a technical perspective, Bitcoin’s continued price bounce appears to be part of an oversold bounce, as evidenced by the 4-hour Relative Strength Index (RSI) recently falling below the oversold threshold of 30, a level that often signals an imminent recovery.
Today’s gains came from buying sentiment near the lower trendline of Bitcoin’s dominant triangle consolidation pattern, as seen in the chart above. As a result, BTC’s immediate upside target is around $59,000, which coincides with the downward trendline resistance.
A solid break above $59,000 would likely see the 200-4H exponential moving average (200-4H EMA, blue wave) hit $61,235 in July, which would represent a 4.65% upside from current price levels.
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.