Bitcoin has a good start in July, and $40,000 is "imperative"?

Author: BitpushNews Mary Liu

According to the data from the push terminal, the price of Bitcoin broke through 31,000 US dollars during the trading session of the US stock market on Monday, which triggered the bullish sentiment of investors and analysts.

Speculation over the spot bitcoin ETF application and whether it would be approved by the U.S. Securities and Exchange Commission (SEC) has dominated the market headlines over the past week, despite a Wall Street Journal report on Friday that the SEC informed several ETF filings of incomplete information, leading to bitcoin’s momentary loss. But Cboe quickly resubmitted the form late that night, and Nasdaq updated the application on Monday on behalf of BlackRock, both naming Coinbase as a partner overseeing the sharing agreement.

Investment firm CoinShares said Monday that institutional investors are continuing to pour money into crypto products, with inflows worth $125 million in the past week, with most of the money concentrated in bitcoin-related funds.

A further rally to $40k is "inevitable"?

Some analysts believe that Bitcoin could hit the $40,000 mark soon, given the current market sentiment.

Katie Stockton, founder and managing partner of Fairlead Strategies, predicted on CNBC's "Squawk Box" that bitcoin could rise to $36,000 from where it is currently trading, and then $40,000.

Ambire Wallet CEO Ivo Georgiev told The Block that momentum towards $40,000 should be “easy to achieve” despite concerns about further headline risks.

Meanwhile, Nexo co-founder Antoni Trenchev sees $32,000 as the next resistance level, after which Bitcoin could surge further. He noted that July is generally a good month for digital assets. “It’s easy to forget that Bitcoin has been taking a beating since the FTX crash, but in early July we saw it gain over 80%,” he tweeted.

Trenchev compared Bitcoin's performance to most of the altcoin market, which he believes is still at risk of being classified as a securities regulation, a problem that will last at least until the end of the year.

He said: "Bitcoin has surpassed its April highs, while the altcoin market is 20% below April levels and 70% below its 2021 highs. Bitcoin doesn't have to worry about regulation and stuff like that, Its resilience and impact set it apart as the new month and quarter begins."

Antoni Trenchev added: "If the SEC doesn't take the time to approve one of the spot bitcoin ETFs, it will undoubtedly have a big impact on the crypto market".

Crypto analyst Michael Nauss noted that BTC/USD closed above the adjusted volume-weighted average price (AVWAP) for the first time since its all-time high in 2021.

AVWAP examines important support and resistance levels based on trader behavior, with June's close above $30,000 marking a recovery not seen in two years.

Cubic Analytics CEO Caleb Franzen retweeted Nauss' tweet, calling on market watchers to extend their time preference. He pointed out, “Bitcoin was around $26,000 when the BlackRock ETF filing was announced, and it went up to a year-to-date high above $31,000, and it’s still trading above $30,000, which is what people lost. Sanity? No, I predict higher highs and higher lows.”

Bitcoin’s resilience against macro headwinds

Uncertain macroeconomic and inflation conditions, combined with a seemingly hawkish Fed, could pose short-term headwinds.

Inflation-adjusted U.S. government bond yields are rising, leaving some observers concerned about underlying risk aversion in stocks and broader financial markets. Crypto analysts, however, expect bitcoin and digital assets in general to remain resilient.

The real yield on five-year Treasury notes rose to nearly 2% last week, surpassing a September 2022 high of 1.92% and the highest level since late 2008, according to data tracked by TradingView. The 10-year treasury bond yield is 1.6%, which is very close to the 2009 data. Meanwhile, real yields on two-year Treasury notes have reached 3%, the highest level in at least a decade.

Rising U.S. bond yields could dampen economic growth and make investing in risky assets like bitcoin and gold less attractive. Bitcoin and Wall Street's tech-heavy Nasdaq index have historically moved inversely to U.S. Treasury yields.

Richard Usher, head of over-the-counter trading at crypto bank BCB Group, believes that the recent surge in U.S. bond yields is a problem for stocks, not digital assets.

Most macro traders, sensitive to changes in U.S. Treasury yields, left the cryptocurrency market during last year's rout, leaving "long-term holders" in control. Usher wrote in his article: "U.S. bond yields are now a real substitute for equity risk markets. The question to ask is what kind of investor is this return attractive? are looking for higher potential returns, or are making long-term investments in the growth of the industry or asset class. Therefore, I think rising U.S. bond yields are more of a headache for blue chip stocks than markets such as technology or cryptocurrencies, and will not Disrupting medium-term growth narrative".

Ben Lilly, a cryptoeconomics researcher at Jarvis Labs, told Coindesk that in the long run, the rising costs may actually bring more capital to productive sectors such as blockchain. “It just goes to show the normal way the cost of capital is going,” Lilly said. “When traditional markets get bumpy, many people tend to look at the crypto industry as a way to increase productivity. Innovations such as programming currencies and DeFi bring more capital, which promises to increase productivity.”