Kucoin

The weekend attack on pro-crypto presidential candidate Donald Trump is expected to boost bids for cryptocurrencies, according to one observer.

Impact on Cryptocurrency Market

Assets tied to Trump’s chances of winning the November 4th elections are experiencing renewed volatility. This comes after an assassination attempt on the former president on Saturday. Bitcoin (BTC) has surged 7% to $62,500 since the attack, increasing Trump’s odds of winning to 70% on Polymarket.

Bitcoin’s Momentum

Bitcoin has surpassed the crucial 200-day simple moving average (SMA), a key indicator of long-term trends. This trendline, which has characterized the downtrend since early June highs, signals a positive momentum for traders, according to CoinDesk data. Additionally, Trump-themed Polifi tokens, which blend politics and finance, have also surged.

Trump’s Crypto Strategy

In recent months, Trump has pivoted to support crypto to outmaneuver his rival, Joe Biden, and win over the crypto community seeking a friendlier regulatory environment. Bitcoin and the broader crypto market are now seen as bets on Trump’s victory. The former president is set to speak at the Bitcoin 2024 conference in Nashville, Tennessee, on July 27.

Market Reactions

Greg Magadini, director of derivatives at Amberdata, noted in an email, “The biggest fundamental news over the weekend was the Trump assassination attempt. Absolutely insane. This has improved the odds of a Trump presidency. Trump being the pro-crypto president should help galvanize the cryptocurrency bids.”

Global Financial Impact

The Chinese yuan (CNY) traded lower against the U.S. dollar due to the potential for higher trade tariffs if Trump wins. Earlier this year, Trump suggested revoking China’s “most favored nation” status for U.S. trade and imposing tariffs of over 60% on Chinese goods. The Mexican peso (MXN) also fell, reflecting Trump’s historically tense relations with Mexico.

U.S. Financial Markets

Prices for futures tied to the 10-year Treasury note declined, hinting at higher yields. A Trump return to the White House would likely mean more spending, tax cuts, and higher budget deficits. Investment banks are betting that a Trump victory would steepen the currently inverted yield curve, historically leading to broad-based risk aversion in financial markets.

Stock Market and Dollar Index

As of writing, S&P 500 futures traded 0.18% higher, signaling a positive open on Monday despite disappointing economic growth figures from China affecting Asian stocks. The dollar index, tracking the greenback’s value against major fiat currencies, traded 0.10% higher at 104.19, according to TradingView.

Bitcoin ETF net inflows have surged to a record high, reaching $1.05 billion in the past week, with an all-time high (ATH) on June 12th. This surge underscores the growing demand for Bitcoin ETFs.

The Rise of Bitcoin ETFs

• Milestones: Bitcoin ETFs have boosted investor confidence despite market crashes, becoming increasingly popular.
• Demand: Immediate post-launch demand validated the years of discussions before approval.
• Altcoins: The success of Bitcoin ETFs has led to the development of Ethereum and Solana ETFs, with more altcoins expected to follow.

Volatile June Market

• Early June: Initial net flows were negative, causing investor uncertainty.
• Early July Turnaround: Modest inflows of $21 million and $12 million on the first two days of July increased to $73 million and $129 million on the third and fourth days.
• Market Crash: Outflows of -$14 million and -$21 million on the 5th and 6th were linked to the German government selling seized Bitcoin and Mt. Gox transferring hacked tokens.

Rebound and Record Highs

• Rebound: A $143 million net inflow on the 8th, followed by $295 million and $216 million on the 9th, led to the highest weekly inflows in months.
• ATH on June 12: The market reached a new ATH with inflows exceeding $310 million, driven by six consecutive days of inflows.

Key Contributors

• Major Inflows: BlackRock ETF (IBIT) with $120 million, Fieldy ETF (FBTC) with $115 million, and Grayscale RTF GBTC with $23 million.

Market Reflections

• Bitcoin Price Movements: Bitcoin’s price dropped from $63,599 on July 1 to a low of $53,905 on July 5, coinciding with negative net flows. As inflows surged, so did Bitcoin’s price, currently at $58,059.63.

This exceptional week for Bitcoin ETFs marks the best performance in months, with significant inflows reflecting the market’s growing optimism.

The German government has almost sold all of its Bitcoin holdings. According to Arkham Intelligence, the government recently transferred 5,000 BTC to exchanges, leaving only 4,925 BTC in its wallet.

This is less than 10% of the original 50,000 BTC seized from Movie2k. Despite this significant sell-off, Bitcoin prices have not plunged into a bear market.

Impact of Mt. Gox Creditor Sales

Another potential market pressure comes from Mt. Gox creditors, who are starting to receive their Bitcoin. While this could impact Bitcoin prices, it’s uncertain how much will be sold by these long-term holders, or Bitcoin OGs.

CPI Data and Market Reactions

Thursday brought some positive news for Bitcoin. The Consumer Price Index (CPI) data was better than expected, increasing the likelihood of a rate cut in September. However, markets still declined, with the Nasdaq dropping 2%.

Chances of a Bitcoin Rally

The big question remains: Will there be a Bitcoin rally? After a 27% price reversal, Bitcoin aligns more closely with previous bull market corrections. The weekly stochastic RSI is at the bottom, hinting at a possible upward movement. Monday’s market opening will be crucial to see if this crossover occurs, potentially igniting strong price momentum.

Even if the Bitcoin price remains low for a while, the anticipated rally seems imminent. Patience may be required as the market finds its footing.

Thursday was a pivotal day for crypto markets. Bitcoin (BTC) could not overcome a key resistance level despite a favorable US inflation report. The US reported its first drop in consumer prices in four years, which led markets to anticipate a Fed rate cut. This initially boosted higher-risk assets, including BTC.

Bitcoin’s Failed Breakthrough

For a moment, it seemed like Bitcoin bulls would push the price above the descending trendline that has characterized the sell-off since early June. This would have signaled an end to the pullback, attracting momentum traders. However, hopes were dashed as Bitcoin’s price fell below $57,000 early today, reversing the bullish momentum.

Implications of the Latest Bull Failure

The failure to break the trendline resistance, despite positive macroeconomic news, suggests potential further price weakness. A similar trendline rejection on July 1 deepened the sell-off, indicating that the market may face continued challenges.

Potential Bullish Indicators

Despite recent setbacks, there is hope for Bitcoin bulls. The daily chart MACD histogram, an indicator of trend strength and changes, is hinting at a crossover above zero, which could signal a bullish shift in momentum. Additionally, the supply overhang from Germany’s Saxony state, which contributed to the price drop earlier this month, is nearly exhausted.

Market Influences and Future Outlook

Uncertainty remains about how much of the 95,000 BTC, part of the total 140,000 BTC set for distribution to Mt. Gox’s creditors, will be liquidated. Crypto prime broker FalconX noted that some of the $16.3 billion FTX repayment could translate into buying pressure. Additionally, the increasingly positive stance towards crypto and a potential interest rate cut in September might benefit risk assets, including Bitcoin.

FalconX also mentioned that potential selling by Mt. Gox’s creditors might differ from Saxony’s sales. They suggested that more flow might go to exchanges rather than professional liquidity providers, or that a more diversified holder base could spread out sales over time.

Conclusion

The Bitcoin price struggles to surpass key resistance levels despite positive economic news, indicating possible continued volatility. However, several indicators and market dynamics suggest potential bullish shifts in the near future.

Despite recent price corrections, crypto investors maintain a bullish outlook, according to a CoinGecko survey.

Bitcoin’s Key Price Levels

Bitcoin (BTC) is currently holding the $58,000 price level, which is crucial for breaking its recent choppy phase, according to trader Altcoin Sherpa. This level aligns with Bitcoin’s 200-day exponential moving average (EMA 200). To pursue $63,000, Bitcoin must close above this level on higher timeframes.

“If BTC can’t break it, we might see it test the low 50ks. We’re in a wait-and-see mode now,” added Altcoin Sherpa.

Recent Price Movements

Bitcoin attempted to rise today, as reported by trader Rekt Capital. He noted on X that BTC tried to break a one-and-a-half-month downtrend by surpassing the $59,000 price level. However, after slightly overtaking the downtrend line, Bitcoin was pushed back to the low $58,000 level.

Rekt Capital emphasized the importance of Bitcoin closing the week above $60,600. Failing to do so risks further declines, preventing a return to the accumulation range.

“Bitcoin is rallying now. It needs to reclaim the $60,600 range low as support to return to the re-accumulation range it broke down from last week,” Rekt Capital said.

Investor Sentiment Remains Positive

Despite these price fluctuations, the majority of crypto investors remain optimistic. According to a CoinGecko survey, over 50% of investors and builders are still bullish on the current bull cycle. This is notable even as traders and spectators exhibit the most bearish sentiment since the halving.

Final Thoughts

The crypto market is experiencing volatility, but investor sentiment remains largely positive. Bitcoin’s performance at key price levels will be crucial in determining its next moves.