Bitcoin’s price posted gains in the first month of the third quarter, snapping the longest losing streak it’s seen in nearly two years.
The world’s largest cryptocurrency by market capitalization rose 20 percent in July, having registered losses in the previous two months – the first instance of back-to-back monthly drops since August 2016.
At press time, bitcoin (BTC) is trading at $7,580, according to CoinDesk’s Bitcoin Price Index (BPI).
At first instance, the rally seen in July may appear corrective in nature as BTC was looking oversold at the end of Q2, courtesy of a 58 percent drop in the first six months of the year.
However, a detailed look at crypto market metrics reveals the July rally had substance.
To start with, the BTC dominance rate surged in July as prices recovered from the yearly lows below 6,000, indicating the investors are likely betting on a sustained rally in BTC and are not merely buying the leading cryptocurrency to rotate money into other innovations.
- The BTC dominance rate rose to a seven-month high of 48.3 percent on July 31 and was last seen hovering at 47.8 percent.
Secondly, trading volumes showed signs of life, adding credence to BTC’s inverse head-and-shoulders bullish reversal.
The average daily trading volume in July was $4.56 billion – up 5.11 percent compared to the average daily trading volume of $4.34 billion seen in June, according to CoinMarketCap data. Also, the average daily trading volume rose for the first time in July after three straight monthly declines.
Clearly, BTC looks primed for further gains after July’s 20 percent price rise. Still, the bulls need to adopt a cautious stance as the major part of the rally was likely fueled by expectations that institutional money would flow into cryptocurrency waters if the US SEC approves bitcoin exchange-traded-funds (ETFs).
Thus, a BTC rally could unravel if the SEC rejects proposals for ETF approval. We have already seen the trailer of what could happen if the SEC continues to play spoilsport.
For instance, BTC prices fell sharply from $8,200 to $7,900 last Thursday on SEC’s rejection of the Winklevoss bitcoin ETF and more importantly, the bullish momentum has weakened since Friday.
Looking ahead, BTC could continue to rise as increasing calls for bitcoin ETF will likely keep the cryptocurrency in demand. The technical studies are also biased toward the bulls.
Bitcoin cleared the falling channel last week, signaling the sell-off from the record high of $20,000 reached in December has ended.
What bulls need now is a convincing move through the 50-week moving average (MA), currently located at $8,430. If scaled, the cryptocurrency will likely attack $10,000 in a couple of weeks.