Bitcoin has experienced a notable rise, increasing approximately 1.70% intraday to around $58,885 on July 13. This rebound from its five-month low is driven by several key factors.
What’s Driving Bitcoin’s Price Increase?
1. German Government’s Bitcoin Sales
The German government has been liquidating its Bitcoin holdings, offloading over $2.5 billion worth of BTC since June 17. This large sale initially caused Bitcoin’s price to drop by about 12.70%. However, the market has rebounded more than 10%, with the government now holding around 9,100 BTC.
2. Institutional Investors Stepping In
Institutional investors have been strategically buying Bitcoin during its dips. Cauê Oliveira, an analyst at CryptoQuant, noted a significant increase in wallet balances holding between 1,000 and 10,000 BTC since early June. These large holders, often referred to as “whales,” accumulated over 10,000 BTC worth approximately $5.7 billion during a period of a 23% price decline. This indicates a calculated move to buy Bitcoin below $60,000.
3. Weakening US Dollar
Bitcoin’s recent gains are also linked to the weakening of the US dollar. The US Dollar Index (DXY), which measures the dollar’s strength against a basket of major foreign currencies, fell 0.90% in a week, reaching around 104 on July 12—its lowest level in about five weeks. This decline is driven by bond traders’ expectations of a potential interest rate cut in September and concerns over a growing US government deficit, which hit $1.27 trillion year-to-date until June.
A weaker dollar often leads investors to seek higher returns in riskier assets, including cryptocurrencies like Bitcoin.
Technical Analysis
From a technical perspective, Bitcoin’s price rebound seems to be an oversold bounce. The four-hour relative strength index (RSI) recently fell below the oversold threshold of 30, typically signaling a recovery. Additionally, Bitcoin’s current gains are supported by buying activity near the lower trendline of its ongoing triangle-shaped consolidation pattern. This sets an immediate upside target at around $59,000.
A decisive break above $59,000 could push Bitcoin towards the 200-4H exponential moving average (EMA) at approximately $61,235, suggesting a potential increase of 4.65% from current levels.
Conclusion
The recent surge in Bitcoin’s price is influenced by institutional buying, the German government’s BTC liquidation, and a weakening US dollar. While these factors suggest potential for further growth, it is essential for investors to conduct their own research and consider the inherent risks associated with cryptocurrency investments.
