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Bitcoin Blues May Extend Into July, But Second Half Outlook Is Upbeat
Bitcoin’s blues may last through July, but investors are still optimistic about the cryptocurrency in the second half of the year. The cryptocurrency has yet to break out of the tight range it has been stuck in since March, between $60,000 and $70,000. It fell to the lower end of that range this week and is now on track to close June down 10%, according to Coin Metrics. That would make it its worst month since April and its second month of losses in three. July is typically a strong month for Bitcoin, which has closed the month up in seven of the last 11 years, according to CoinGlass. At $61,000, Bitcoin has key support at the $67,000 level, chartists say, although a break below that level could be “damaging.” Investors are worried that the cryptocurrency will suffer further declines due to oversupply ahead of July. “The Bitcoin halving has been a known positive event for market supply this year: we’ve produced less bitcoin,” said Zach Pandl, managing director of research at Grayscale Investments. “There are always other known potential sources of bitcoin supply from the government, for example, but it’s always uncertain when that will hit the market. To some extent, the supply being liquidated by things like government agencies is partially offsetting the short-term positive effects.” Bitcoin Rush Having.” This week, the cryptocurrency market was surprised when the U.S. and German governments sent large amounts of previously seized bitcoin to exchanges, according to CryptoQuant. Additionally, the trustee of the now-defunct Mt. Gox exchange announced it will begin repaying creditors — 142,000 bitcoin worth $9 billion at today’s prices — starting in July. Some investors are concerned that creditors may sell some of that bitcoin in July, after waiting more than 10 years for a resolution with the exchange. “This fear is justified given the recent behavior of Gemini creditors who are believed to have liquidated some of the crypto assets they received in recent weeks; “In particular, nearly $2 billion in crypto assets were returned to 232,000 retail customers from failed crypto lender Genesis and crypto exchange Gemini,” JPMorgan’s Nikolaos Panigirtzoglou wrote in a note this week. “A similar downside risk looms in July with Mt. Gox creditors,” he added. “Assuming most of the liquidations from [them] occurs in July, this creates a trajectory where cryptocurrency prices experience further pressure in July, but start to recover from August onwards.” BTC.CM= 1 million mountains Bitcoin’s return to $60,000 Bitcoin is still firmly in a bull market, and potentially slow in the short term, and market participants expect the cryptocurrency to retest its March all-time high of around $73,000 by the end of the year, if the market gets another CPI low, a Federal Reserve rate cut by the central bank’s September meeting would become the base case for many macro investors, Pandl said. Bitcoin, along with other risk assets, tends to rise on expectations of rate cuts. The next look at the consumer price index is scheduled for July 11. US presidential election campaign Messages about the US dollar, which is moving inversely to bitcoin, could also catalyze the next rally, he added. “We don’t know what candidate Trump’s views are on the U.S. dollar,” Pandl said. He would like to see lower U.S. trade deficits, but so far he’s mostly focused on the need for tariffs. “It’s possible that during the campaign, Trump could introduce the idea that we need a weaker dollar,” he added. “These two things together would be positive for Bitcoin: Fed rate cuts and one of the two presidential candidates talking about the dollar being weak.” Marion Laboure, senior strategist at Deutsche Bank Research, said growing demand for crypto ETFs would help keep bitcoin’s price “elevated” in the months ahead. Initial filings known as 19b-4s for ether ETFs were approved in May, and the funds themselves are in the process of getting S-1 approvals, which are expected to come in the coming weeks. This week, VanEck and ARK 21Shares also filed for what would be the first Solana spot ETFs. “There’s a lot of uncertainty in the market, but I’m pretty bullish,” she said. “I wouldn’t be surprised if we approved even more ETFs. If we had a clearer institutional framework, we would have more ETFs… We’re moving toward greater democratization, greater institutionalization of ETFs.” —CNBC’s Michael Bloom contributed to this report.