The Bitcoin Gloom: July Market Outlook

The Bitcoin Gloom: July Market OutlookWhile Bitcoin is shrouded in gloom throughout July, investors remain optimistic about the cryptocurrency's performance in the second half of the year. Since March, Bitcoin has been stuck in a narrow trading range between $60,000 and $70,000, failing to break out

The Bitcoin Gloom: July Market Outlook

While Bitcoin is shrouded in gloom throughout July, investors remain optimistic about the cryptocurrency's performance in the second half of the year. Since March, Bitcoin has been stuck in a narrow trading range between $60,000 and $70,000, failing to break out. According to Coin Metrics, the cryptocurrency dipped to the lower end of this range this week, falling 10% in June. This is Bitcoin's worst month since April and its second losing month in three.

July is typically a strong month for Bitcoin, with the cryptocurrency gaining value in seven out of the past eleven years. However, investors are concerned that the cryptocurrency could decline again in July due to an oversupply. Chart analysts point out that Bitcoin is currently trading at $61,000, with $67,000 being its key support level, breaking which could "be disruptive."

Concerns about oversupply stem from several recent events:

• Government Institution Bitcoin Liquidations: As reported by CryptoQuant, the US and German governments sent a large amount of previously seized Bitcoin to exchanges this week, sending shockwaves through the cryptocurrency market.

• Mt.Gox Creditor Repayments: The trustee of the now-defunct Mt.Gox exchange has announced that it will begin repaying creditors with 142,000 Bitcoin starting in July, worth $9 billion at today's prices. Some investors are concerned that creditors may sell some of this Bitcoin in July, as they have waited over a decade for a resolution with the exchange.

Nikolaos Panigirtzoglou of JPMorgan said in a note this week that these concerns are valid, citing the recent actions of Gemini creditors. Gemini creditors are believed to have cashed out some of the crypto assets they received in recent weeks, particularly the nearly $2 billion in crypto assets returned to 232,000 retail clients by the bankrupt crypto lender Genesis and crypto exchange Gemini. He added, "Mt.Gox creditors will also face a similar downside risk in July. Assuming [they] liquidate a significant portion in July, it sets up a trajectory for further pressure on crypto prices in July but a rebound starting in August."

Despite the potential for near-term dips, Bitcoin remains firmly in a bull market, with market participants expecting the cryptocurrency to retest its all-time high of around $73,000 in March by the end of the year.

Factors supporting this optimism include:

• Federal Reserve Rate Cut Expectations: If low CPI re-emerges, a rate cut by the Federal Reserve at its September central bank meeting will become a base case for many macro investors. Bitcoin and other risk assets tend to increase in value as rate cut expectations heat up. The next release for the Bitcoin price index is on July 11th.

• US Presidential Election Impact on Dollar: Zach Pandl, Managing Director of Research at Grayscale Investments, said that campaign messages around the US presidential election regarding the dollar (which moves inversely to Bitcoin) could also catalyze Bitcoin's next move upwards. Pandl said, "We don't know what candidate Trump thinks about the dollar." Trump has expressed a desire to see a reduction in the US trade deficit, but so far, his main focus has been on the necessity of tariffs. ""There's a possibility that Trump will come out during the campaign and say that we need a weaker dollar," he added. "Both of those things together would be positive for Bitcoin: a rate cut by the Fed and one of the two presidential candidates talking about a weaker dollar."

• Growth of Cryptocurrency ETFs: Marion Laboure, Senior Strategist at Deutsche Bank Research, said that the increasing demand for cryptocurrency ETFs will help keep Bitcoin prices "elevated" in the coming months. The initial application for an Ethereum ETF known as 19b-4 was approved in May, with the fund itself undergoing S-1 registration approval - expected to be granted in the coming weeks. This week, VanEck and ARK 21Shares also filed for the first spot Solana ETFs. She said, "There's a lot of uncertainty in the market, but I'm very optimistic. I wouldn't be surprised to see more ETFs come to market. If we have a clearer regulatory framework, there will be more