Coinbase

Bitcoin (BTC) enthusiasts have reasons to be optimistic this month. Historical data and seasonal cycles suggest that the largest cryptocurrency may see a price boost following months of declines and rangebound trading.

Recent Trading Trends

BTC has fluctuated between $59,000 and $74,000 since April. This volatility is due to billions in sales, impending selling pressure, outflows from exchange-traded funds (ETFs), and negative sentiment among retail traders. However, a historically bullish July could change this trend.

On the first day of July, U.S.-listed ETFs saw inflows of nearly $130 million, their highest since early June, following over $900 million in outflows during June.

Historical Performance

Singapore-based QCP Capital highlighted in a recent Telegram broadcast, “Bitcoin has a median return of 9.6% in July and tends to bounce back strongly, especially after a negative June (-9.85%).” They also noted that their options desk observed positioning for an upside move, likely anticipating the ETH spot ETF launch. Many indicators suggest a bullish July.

Over the past decade, Bitcoin has averaged gains of more than 11% in July, with positive returns in 7 out of 10 months. Crypto fund Matrixport reported that July returns from 2019 to 2022 were around 27%, 20%, and 24%, respectively.

Understanding Seasonality

Seasonality refers to the predictable changes in asset prices that occur every calendar year. While these patterns might seem random, they often stem from factors like profit-taking around tax season in April and May, leading to drawdowns, or the generally bullish “Santa Claus” rally in December, indicating increased demand.

Bitcoin’s recent recovery faces a potential obstacle as short-term holders might liquidate their holdings near $65,000, capping the cryptocurrency’s upswing.

Bitcoin’s Recent Performance

Bitcoin (BTC) aims to bounce back from its July losses. However, on-chain data suggests resistance around the $65,000 mark. As of now, BTC is trading 1% higher at $63,200, recovering from a 7% loss in June. This decline reversed May’s gains and was mainly driven by miner selling and concerns over ETF inflows, which may not represent bullish bets.

Short-Term Holders’ Cost Basis

June’s drop pushed BTC prices below the aggregate cost basis of short-term holders. These wallets, holding Bitcoin for 155 days or less, now face potential losses. According to LookIntoBitcoin, the cost basis for these holders is $65,000. Realized price, reflecting the average price at which coins were last spent, shows short-term holders in the red. This situation may lead to increased selling pressure near $65,000.

Market Analysis

Analysts at Blockware Intelligence highlighted that BTC’s price is below the short-term holders’ cost basis for the first time since August 2023. They expect resistance around $65,000 as short-term speculators might exit their positions at breakeven levels. Historical data shows that when BTC lost this support level last summer, prices traded sideways for two months before breaking out again.

Long-Term Holders’ Perspective

On the other hand, long-term holders are incentivized to maintain or increase their coin stash. Their average cost basis is less than $20,000, significantly lower than BTC’s current market price. For long-term holders, the recent 15% pullback from March’s high of $73,500 is a normal bull market correction.

Blockware Intelligence noted that during the 2017 cycle, BTC experienced ten drawdowns of 20% or more. Such corrections are healthy and provide opportunities for strategic investments by those with a long-term view.

Conclusion

Short-term Bitcoin holders face potential resistance at $65,000, which may impact BTC’s price recovery. While this poses challenges for short-term investors, long-term holders view it as a normal market fluctuation, reinforcing their strategy to hold or accumulate more coins.

Bitcoin’s price history shows that June is often a bearish month for the cryptocurrency. This year was no different, with Bitcoin rejecting many recovery attempts. Currently, Bitcoin’s price fluctuated between a low of $60,630.05 and a high of $61,605.23 in the past 24 hours, marking a 1.23% growth.

Will July Bring a Positive Change?

Historically, Bitcoin’s price trends are intriguing. According to Cryptorank, June will be the second negative month this year. January saw a modest gain of 0.87%, February and March ended with substantial increases of 44% and 16.3%, respectively. March’s bullish trend peaked with Bitcoin reaching an all-time high (ATH) of $73,750.07, largely due to the launch of the spot Bitcoin ETF.

However, April marked a bearish turn with a 14.7% drop. In May, Bitcoin rebounded with an 11.1% increase. Yet, June has seen an 8.79% decline so far. Historically, June has not been favorable for Bitcoin, ending in the red four out of the past five years.

Despite Bitcoin’s erratic performance, market experts remain optimistic about its future. Last June ended with an 11.9% gain, while July saw a 4.04% decline. This July, Bitcoin might break this trend and end on a positive note. With no major regulatory challenges ahead, Bitcoin’s future looks promising, especially with October’s historically bullish trend.

BTC Growth Catalysts to Watch

Several factors are driving Bitcoin’s resilience and growth. The biggest catalyst currently is the spot Bitcoin ETFs, which have helped prevent Bitcoin from falling toward the $50,000 support zone. Despite experiencing outflows this month, these ETFs hold significant recovery potential as more corporate entities enter the crypto market.

If this trend continues, the inflow into Bitcoin ETFs in the coming months could push Bitcoin’s price back to its previous ATH. The positive outlook for Bitcoin’s price history and the potential for a bullish July suggest that Bitcoin may soon see significant growth.