Bitcoin hasn’t been short of good news over the last month — from the BlackRock Bitcoin ETF filing, to the first case the SEC has lost in its efforts to regulate crypto through enforcement, to June’s somewhat reassuring inflation data . Still, breaking the $31,000 mark just doesn’t seem possible. Before or after the release of this week’s CPI data, the index barely moved for the third month in a row. And although the price rose 4% after Ripple’s partial win on Thursday, it gave back all of those gains the following day to end the week just below the zero line – down for the third straight month. The dollar index, which normally moves in the opposite direction to bitcoin, also hit its lowest level in more than a year last week, and bitcoin didn’t budge. Investor confidence may be at a new high, but it’s more than an adrenaline rush. Many traders are drawing similarities between Bitcoin’s behavior today and its movements leading up to the last halving, when the coin was still recovering from the major crypto crash of 2018. “In 2019, we experienced periods of strength followed by setbacks,” said Andrew Lawrence, co-founder and CEO of custodian Censo. “It wasn’t until the bitcoin halving a year later, in spring 2020, that we saw a market rally turn into a sustained rally. Something similar is happening again this time, and next year’s halving will likely mark the beginning of the next rally.” BTC.CM= 1M Mountain Bitcoin has struggled to make a meaningful break above $31,000 for the last month . The halving is an event where the Bitcoin mining reward is halved as provided in the Bitcoin Code to reduce the supply of the cryptocurrency. Historically it takes place about every four years and has laid the groundwork for new bull runs. The next one is expected to appear in May 2024. “Bitcoin clearly bottomed out late last year and now we’re in some sort of recovery and accumulation phase,” Lawrence added. Third Quarter Volatility and GBTC on Deck The third quarter of the year is historically the weakest for Bitcoin. According to CoinGecko, its average third quarter gain since 2014 is just 4.67%, and in its entire history, the company has had a positive third quarter for only four of its nine quarters. Bitcoin is about 95% off its 2022 bottom of just under $16,000 and it’s only two weeks into July. Investors tend to expect seasonal gains in the fourth quarter, which has given Bitcoin an average return of 93.38% since 2013. Meanwhile, market watchers expect volatility but say the trend is pointing towards strength. Cantor Fitzgerald said on Friday that the SEC vs. Ripple case is a “crucial case” whose outcome will be “crucial in shaping future U.S. crypto regulation” and provide a tailwind for bitcoin’s price. The resulting greater regulatory clarity could increase the likelihood of spot Bitcoin ETF approval, he added. The Ripple case also gives the industry hope that the SEC will “take your foot off the enforcement pedal,” Canaccord told Genuity. Investors are also looking to the decision on Grayscale’s lawsuit — challenging the SEC’s decision to refuse to convert its Grayscale Bitcoin Trust into an ETF — as another important catalyst to look forward to this summer. “With liquidity conditions still weak and macroeconomic uncertainty remaining, we wouldn’t be surprised to see crypto assets become more volatile in the near term, but any downside should be viewed as a buying opportunity for crypto assets and cryptocurrency-related stocks,” Chase said White, an analyst at Compass Point, in a note on Friday. Selling Pressure Comes From Miners With Bitcoin halving — as well as a surge in price and activity — miners are looking to add more computing power, also known as the hash rate, to their operations. To this end, they sold their bitcoins to fund the operation. In many cases, this is the best way to raise cash, as stock prices are relatively low and high interest rates make them unlikely to borrow money. According to Glassnode, last week miner sales volume reached its highest level since March 2019, and Bitcoin’s hash rate hit an all-time high. “Bitcoin miners are the prime suspects for pressuring bitcoin’s upside potential as they have been sending their bitcoins to exchanges at an unprecedented rate since late May,” said Yuya Hasegawa, crypto market analyst at Japanese bitcoin exchange Bitbank. “To make matters worse, bitcoin mining difficulty hit an all-time high this week, making it harder and potentially less profitable to mine bitcoin.” Miners’ profitability depends on how difficult it is to mine bitcoin. The network has an algorithm to handle this. “Until the next difficulty adjustment, which will be in about two weeks, miner selling pressure will likely continue,” Hasegawa added.
