Bitcoin Appears Prime For A Rally In July, But Several Things Could Go Wrong For BTC — Here’s How

07.07.2024 / Payment system news

Bitcoin (BTC) endured a torrid end to June as it threatened to sink below the $60K mark, but traders have their eyes peeled for the light at the end of the tunnel in July.

Despite the simmering optimism, several factors stand in the way of higher prices for the largest cryptocurrency, with several analysts predicting a dip to $50K. Technical indicators suggest that investors may begin profit-taking based on the belief that the asset may have reached its highest ebb for the quarter.

They hinge their analysis on Bitcoin’s Adjusted Spent Output Profit Ratio, a metric used to track the losses and gains of Bitcoin’s moves in relation to present prices. Since the start of May, the metric has climbed to 1.03 from 1, indicating profit-taking from investors, but this sort of action typically represents an overall healthy market rather than capitulation.

However, BTC’s net unrealized profit and loss (NUPL) tells a grimmer tale, with a reading of 0.54 seen as a tell-tale sign of an incoming steep market correction. A glance at BTC’s  24-hour chart indicates a tentative breaking of the bull pennant, pointing to a potential decline of asset prices to $55K in early July.

Perhaps the biggest threat to BTC in July is the scheduled release of funds to Mt. Gox’s creditors after nearly a decade of negotiations. According to industry sources, up to 140,000 BTC worth over $9 billion will be transferred to creditors in a move that could upset the delicate balance of the ecosystem.

There is wide speculation that a chunk of the creditors will sell off their holdings after receiving payment to take profits, potentially netting nearly 20,000% worth of profits since the Mt. Gox hack in 2014. Previous payouts of BTC to creditors by exchanges have negatively impacted asset prices with Gemini users dumping their BTC en masse back in May. 

“Mt. Gox about to dump $9 billion of bitcoin and bitcoin cash in repayments. A logical selling pressure is expected, potentially taking us below 60K,” said the pseudonymous Deken Kid on X. “I would expect to stay above 55K, though.”

Not all doom and gloom for BTC

For all the bumps ahead for BTC, bulls are still rubbing their hands in glee at the prospects of a price rally before the end of July. While the rest of the market braces for a dip, a number of analysts are predicting an influx of retail and institutional investors at the $55k mark, capable of engineering a rally of their own.

“If this happens (dip), it’s probably the best buying opportunity you get,” said Degen Kid. “The correction late buyers were waiting for, the re-entry for local top sellers.”At the moment, BTC is focused on reclaiming $60K, shaking off the specter of a sub-$55K valuation at the start of July, but the premier cryptocurrency has yet to face any major hurdles to test its resolve.