Bitcoin (BTC) Market Bottom Nears as Bullish Divergence, September Rate Cut Prospects Emerge

Bullish divergence on Bitcoin's price chart, September rate cut prospects, and increasing M2 supply are some catalysts that might help resume the BTC

After a turbulent start to July, with prices dropping over 10.50% to trade near $57,000 as of July 7, Bitcoin might be set to resume its bull run in the coming weeks, with several indicators pointing toward a possible bullish divergence.

Bitcoin encountered its lowest levels at $53,550, with losses powered by fear of a market dump because of Mt. Gox’s ongoing reimbursement of more than 140,000 BTC to its clients and the German government's BTC liquidations.

However, the recent price drop was accompanied by an increasing divergence between dropping prices and the rising relative strength index (RSI). The divergence shows that the selling pressure is slowly weakening, although the price keeps dropping.

Based on technical analysis, the scenario mostly indicates the possibility of a reversal or a slowdown in the current drop, hinting that Bitcoin might soon record a rebound as the market sentiment moves back toward bullishness.

Two other classic technical indicators support the bullish reversal scenario. First, Bitcoin formed a bullish hammer candlestick pattern on July 5, featuring a small body at the upper end of the daily candle, with a long lower shadow and little upper shadow. A similar situation happened in May.

Moreover, Bitcoin’s daily RSI reading is oscillating around its oversold threshold of 30, which mostly precedes a recovery or consolidation phase. Analyst Jacob Canfield says the indicator might signal a rebound, with BTC possibly returning to its “former range high” of above $70,000.

Bitcoin's ability to resume its bull run in the coming weeks surges more because of rising interest rate potentials in September.

As of July 7, Wall Street traders saw a 72% potential of the United States Federal Reserve cutting interest rates by 25 basis points, according to data collected by CME. A month ago, the potential of the same was at 46.60%.

Expectations for lower interest rates have surged because of a slowdown in hiring in the United States of America. When the job market gets weaker, the Fed mostly considers cutting interest rates to stimulate economic activity.

Lower interest rates are mostly bullish for Bitcoin and other riskier assets since they make traditional safe investments like US Treasury notes less attractive.

Another bullish indicator for the Bitcoin market is the resumption of inflows into the US-based spot Bitcoin exchange-traded funds (ETF) after two days of consecutive outflows.

On July 5, when the US reported weak unemployment data, the funds cumulatively attracted $143.10 million worth of BTC, based on data from Farside Investors, indicating a rising risk sentiment among Wall Street investors.

The Fidelity Wise Origin Bitcoin Fund (FBTC) led the inflows with $117 million. On the other hand, the Bitwise Bitcoin ETF (BITB) recorded a net inflow of $30.2 million, and the ARK 21Shares Bitcoin ETF (ARKB), together with the VanEck Bitcoin Trust (HODL), recorded inflows of $11.3 million and $12.8 million.

On the contrary, the Grayscale Bitcoin Trust (GBTC) recorded a net outflow of $28.6 million.

More upside signs for Bitcoin come from a recent surge in the US M2 supply, which measures the money supply that consists of checking deposits, cash, and easily convertible near-money, including money market securities, savings deposits, and other time deposits.

As of May 2024, the M2 money supply increased by around 0.82% year-over-year, reducing its aggregate drop from the peak drop of 4.74% in October 2023 to nearly 3.50%.

M2 supply growth is bullish for Bitcoin since it boosts liquidity in the economy. More money available in circulation results in higher investments in riskier assets such as Bitcoin, because traditional investments like bonds and savings offer reduced returns.

Bitcoin miner capitulation metrics are nearing levels seen in the market bottom after the FTX crash in late 2022, indicating a possible drop for Bitcoin. Miner capitulation happens when miners reduce operations and sell some of their mined Bitcoin and reserves to remain afloat, earn yield, and hedge against Bitcoin exposure.

Market analysts have highlighted multiple signs of capitulation in the past month, during which Bitcoin’s price dropped from $68,791 to as low as $53,550. One major sign is a considerable drop in Bitcoin’s hashrate – the total computational power securing the Bitcoin network.

해시율은 4월 27일 최고 기록에 도달한 후 7.7% 급락하여 초당 576 엑사해시라는 4개월 만에 최저치를 기록했습니다. 이러한 감소는 일부 채굴자들이 채굴 커뮤니티 포스트 내의 재정적 스트레스를 반영하여 운영을 축소하고 있음을 나타냅니다. -반감기.

약한 채굴자로서

The above is the detailed content of Bitcoin (BTC) Market Bottom Nears as Bullish Divergence, September Rate Cut Prospects Emerge. For more information, please follow other related articles on the PHP Chinese website!