Bitcoin (BTC) showed remarkable resilience, hitting a 39-day high of $68,560, recovering more than 29% from its local low on July 5, according to Bitfinex Alpha. The surge showed strong bullish momentum, with five consecutive green daily closes from July 12-16.
Market resilience amid sell-side pressures
One of the major events that affected the market was the liquidation of over 48,000 BTC by the German Bundesbank, which led to significant selling pressure. However, the market absorbed this inflow and showed resilience and recovery in demand. Positive price movements and recovery were possible as selling pressure from both the German government and miners dissipated. The miner sustainability indicator shows that miners are now fairly paid and have returned to profitability for the first time in a month, suggesting that the machine upgrade phase is coming to an end.
Positive ETF inflows
ETF inflows were also positive, with around $1.2 billion recorded last week, the first positive interest since early June. The increase in inflows was due to prices exceeding the average cost of inflows for ETF holders of $58,200, giving the market new confidence.
Order Flow Metrics and Cumulative
Order flow indicators have contributed to the bullish sentiment. The spot cumulative volume delta indicator, which measures the net difference between market buy and sell volume on central exchanges, shows net buying activity for the first time since early March. Additionally, the Bitcoin Exchange Reserve indicator shows a rapid decline in BTC reserves held in exchange wallets, suggesting that large investors are buying during the selloff and moving assets off exchanges, indicating accumulation and potential supply pressure.
Short-term holder dynamics
The cost basis of short-term holders (STH) has also increased, with the realization price currently at $65,176. This indicates that there is renewed buying interest and confidence among short-term holders. The Short-term Holder Expenditure Output Profit Ratio (STH SOPR), which determines whether short-term holders realize profits or losses, is returning to equilibrium, indicating that the capitulation of this group is over.
Economic factors and regulatory developments
In the broader economic environment, U.S. retail sales figures showed a significant slowdown in inflation, which had a positive impact on consumer spending. However, the housing market suffered from high mortgage rates and a shortage of affordable housing. Despite these challenges, manufacturing showed resilience, and factory production exceeded expectations.
Additionally, the US leading economic index continued to contract in June, but at a slower pace, suggesting a less negative long-term growth outlook. On the regulatory front, the US SEC’s approval of Spot Ethereum ETFs from Fidelity, VanEck, and others represents a significant step forward. These ETFs are scheduled to begin trading on July 23, 2024. In Hong Kong, stablecoin sandbox participants face a new regulatory framework, while South Korea has enacted a virtual asset user protection law that mandates strict security measures for exchanges.
For more details, visit the original report on Bitfinex Alpha.
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