Bitcoin
5 Reasons Why Bitcoin Price Is About to Rise Soon
The world of Bitcoin (BTC) is no stranger to volatility and speculation. However, recent developments suggest a potential turning point for BTC following the German government’s sell-offs. So, here are five reasons why Bitcoin’s price could be poised for a significant rally soon.
1. Capitulation of the Miner
Miner capitulation usually signals a market bottom, and recent data indicates that Bitcoin Miners are experiencing significant stress. The Bitcoin True Hashrate Drawdown percentage has reached 7.6%, levels comparable to when Bitcoin was trading at $16,000 during the FTX collapse.
Bitcoin Miner Capitulation, Source: Quinten Francois | X
This level of capitulation implies that weaker miners are being forced to shut down their operations, which historically precedes a recovery in the price of Bitcoin. As these miners cease operations, the selling pressure they exert on the market diminishes. This paves the way for a potential price recovery.
2. German Bitcoin sell-off ends
The German government recently concluded its massive Bitcoin sell-off, which began on June 19. Over the past few weeks, the market has absorbed nearly $3.5 billion in Bitcoin liquidations. Despite this significant selling pressure, the price of Bitcoin has remained resilient around $58,000. This stability amid massive liquidations is a strong indicator of the underlying strength of the market.
Notable crypto analyst Michaël van de Poppe highlighted this resilience on social media platform X. He emphasized that the markets have effectively absorbed this immense selling pressure. With no further German government liquidations expected, the absence of this substantial downward pressure could allow the price of Bitcoin to rally. The trend has already begun with BTC Price exceeding US$60,000.
Read too: Samson Mow proposes 50,000 bitcoin buyback to German lawmaker
3. Bitcoin Whale Accumulation
Whale activity often plays a crucial role in cryptocurrency markets, and recent data suggests an upward trend. According to statistics from blockchain analytics platform IntoTheBlock, Bitcoin Whales acquired an additional 71,000 BTC in the past week. These whales took advantage of the dip caused by the German sell-off.
This substantial accumulation brings the total whale transaction volume on the BTC network to a staggering $41.32 billion. Despite an 8% drop in the 24-hour rate of change, the weekly increase in whale transactions remained robust. The continued accumulation by these large holders drains Bitcoin’s supply, often leading to a price surge.
4. Global inflows into Bitcoin ETFs
Bitcoin exchange-traded funds (ETFs) around the world have seen notable inflows. Bitcoin ETFs in Hong Kong have increased their holdings by 28.6% since the end of June, accumulating a total of 4,941 BTC as of July 13. In Australia, the Monochrome Bitcoin ETF (IBTC) has also attracted attention, approaching the 100 BTC mark since its launch.
Meanwhile, the United States witnessed net inflows into Bitcoin ETFs exceeding $1.1 billion in just one week. This marks the largest weekly inflow on record. This surge in ETF investments underscores the growing institutional appetite for Bitcoin. This could drive Bitcoin’s price higher as more capital flows into the market.
5. High probability of Fed rate cut
Economic indicators and signals from the Federal Reserve point to a high probability of an interest rate cut, which could significantly impact the price of Bitcoin. Bloomberg analyst Mike McGlone predicted that the Federal Reserve will cut interest rates following a reversal in US stocks.
Historical parallels suggest that, following the substantial rate hikes from 2004 to 2006, the first rate cut occurred in September 2007. Similarly, following recent rate hikes totaling 525 basis points since Q1 2022, a rate cut is expected in September.
Despite positive Producer Price Index (PPI) data for June, which indicate persistent inflation, the CME FedWatch The tool shows a 90.3% probability of a rate cut in September. Lower interest rates typically lead to a weaker US dollar and increased investor interest in alternative assets like BTC. Therefore, the price of Bitcoin could see significant growth.
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