Bitcoin’s recent price surge can be attributed to two primary factors: the near completion of the German government’s BTC sales and a weakening US dollar.
Bitcoin’s Rally
Bitcoin has seen a significant rebound from its five-month low, climbing approximately 1.70% on July 13 to around $58,885. This recovery is driven by several key elements:
- German Government’s BTC Sales: The German government has almost finished selling its 70,000 BTC holdings, with only about 9,100 BTC remaining. Since June 17, they have sold over $2.5 billion worth of BTC, leading to a 12.70% drop in Bitcoin’s price during that period. However, in the past eight days, Bitcoin has rebounded by over 10%.
- Institutional Investments: Institutional investors have been buying Bitcoin at lower prices, according to Cauê Oliveira from CryptoQuant. Wallets holding between 1,000 and 10,000 BTC have increased their balances significantly since early June, adding over 10,000 BTC during this period. This activity suggests that larger investors are buying Bitcoin at lower prices, contributing to its recent recovery.
- Bitcoin’s Bottoming Out: This data suggests that Bitcoin may have reached a bottom near its recent low of around $56,700, as significant buying from institutional investors often indicates confidence in a price floor.
Impact of a Weaker US Dollar
Bitcoin’s gains also align with a weaker US dollar, as reflected in the US dollar Index (DXY), which tracks the dollar’s strength against a basket of major foreign currencies. Key points include:
- Decline in DXY: The DXY dropped 0.90% in a week, reaching around 104 on July 12, its lowest level in five weeks. This decline is partly due to rising expectations of an interest rate cut in September.
- US Government Deficit: The US government’s deficit has reached $1.27 trillion year-to-date until June, putting additional pressure on the dollar.
A weaker dollar typically drives investors towards riskier assets like stocks and cryptocurrencies, seeking better returns.
Summary Review: Bitcoin’s recent price increase is driven by reduced selling pressure from the German government’s BTC sales, substantial buying from institutional investors, and a weaker US dollar. These factors collectively boost investor confidence and market momentum for Bitcoin.
Disclaimer: Remember that nothing in this article and everything under the responsibility of Web30 News should be interpreted as financial advice. The information provided is for entertainment and educational purposes only. Investing in cryptocurrency involves inherent risks and potential investors should be aware that capital is at risk and returns are never guaranteed. It is imperative that you conduct thorough research and consult with a qualified financial advisor before making any investment decision.
