Bitcoin gains: What Has Driven the 17% Weekly Surge?
Bitcoin has seen a significant increase, gaining around 17% in just one week. This rise translates to about $9,000 more in value over the past seven days. Last weekend, Bitcoin was trading below $60,000. However, by July 22, it surged to a six-week high, exceeding $68,000. Let’s explore what has been driving this market momentum and whether it will continue.
Bitcoin Is Back
On July 22, industry research firm 10x Research provided several reasons for Bitcoin’s big price pump. Firstly, there has been a shift in market sentiment. When Bitcoin broke above a key level at $61,133, it changed the narrative from bearish to bullish. This shift encouraged more investors to buy Bitcoin, pushing its price higher.
Retail trading has also played a significant role. Many retail investors bought Bitcoin over the weekend, driving the price up. This weekend alone, Bitcoin gained more than 6%. By Monday morning in Asia, it had reached a multi-week high of $68,480.
Another factor contributing to Bitcoin’s surge is the change in market liquidity. After four weeks of net liquidity outflows totaling $8 billion, the crypto markets saw $3.3 billion in inflows last week. This influx, mainly from futures, stablecoins, and spot Bitcoin ETFs, marked a positive trend change. Last week, spot Bitcoin ETFs had about $1.24 billion in inflows over five trading days.
Influence of Spot Ethereum ETF
The hype around spot Ethereum ETFs has also contributed to market gains. These ETFs are set to begin trading on July 23. Although Ethereum’s price has only managed to gain 4.5% over the past week, it still adds to the overall positive sentiment in the crypto market.
Global Market Influences
There have been rumors that China might adopt a more favorable stance on cryptocurrencies. Hong Kong’s new crypto regulations are seen as a test for this potential shift. Additionally, South Korea has proposed postponing crypto taxation until 2028, which has spurred speculative trading and boosted the market.
Impact of Inflation Data
Lower-than-expected Consumer Price Index (CPI) inflation data last week set a floor for Bitcoin prices. This data followed a 20% peak-to-trough decline, helping stabilize Bitcoin’s price. This week, the release of Personal Consumption Expenditures (PCE) inflation reports could provide further bullish momentum.
U.S. Politics and Crypto Market
U.S. politics have also influenced the crypto market. A failed assassination attempt on Donald Trump and President Joe Biden stepping down from the election race have further bolstered crypto market sentiment. Rumors are circulating that the Securities and Exchange Commission (SEC) may settle a major case soon. Additionally, former President Trump is set to deliver a highly anticipated speech in Nashville, where he might announce Bitcoin as a strategic reserve asset. This announcement could trigger a parabolic rise in Bitcoin’s price.
Bullish Week Ahead?
Markus Thielen, head of research at 10x Research, stated that this week could see more momentum. He pointed out that rumors are rife about the SEC settling a significant case. Moreover, former President Trump’s upcoming speech might contain major news for Bitcoin, potentially driving its price even higher.
Retail Trading Impact
Retail investors have been crucial in driving Bitcoin’s recent price surge. Their weekend trading activities have led to significant gains that carry into the following week. This pattern was evident this weekend when Bitcoin gained over 6% from Friday to Monday.
Market Liquidity Inflows
The inflow of liquidity into the crypto market is another key factor. After several weeks of outflows, last week saw a positive change with $3.3 billion in inflows. These inflows came primarily from futures, stablecoins, and spot Bitcoin ETFs, marking a shift in market trends.
Spot Bitcoin ETFs
Spot Bitcoin ETFs have had a substantial impact on the market. Last week alone, these ETFs saw $1.24 billion in inflows. This influx of funds into Bitcoin ETFs indicates strong investor confidence and contributes to the overall price surge.
Spot Ethereum ETF Hype
The anticipation around spot Ethereum ETFs has also played a role in boosting the crypto market. Although Ethereum’s gains have lagged behind Bitcoin, the positive sentiment surrounding the ETF launch has had a beneficial effect on the market.
China’s Potential Crypto Adoption
There are rumors that China might adopt a more favorable stance towards cryptocurrencies. This speculation has been fueled by Hong Kong’s new crypto regulations, which are seen as a potential test for broader adoption in China.
South Korea’s Crypto Tax Postponement
In South Korea, a proposed postponement of crypto taxation until 2028 has spurred speculative trading. This news has positively impacted the market, contributing to Bitcoin’s price surge.
Influence of Inflation Data
Lower-than-expected CPI inflation data last week helped stabilize Bitcoin prices. This week, the release of PCE inflation reports could provide further bullish momentum, potentially driving Bitcoin prices higher.
U.S. Politics
U.S. political events have also influenced the crypto market. A failed assassination attempt on Donald Trump and President Joe Biden stepping down from the election race have added to the positive sentiment. Additionally, rumors about the SEC settling a major case and Trump’s upcoming speech in Nashville could further boost Bitcoin’s price.
Conclusion
Bitcoin’s recent price surge to over $68,000 has been driven by a combination of factors, including market sentiment shifts, retail trading, liquidity inflows, and global market influences. The anticipation around spot Bitcoin and Ethereum ETFs, along with potential changes in crypto regulations in China and South Korea, have also played significant roles. Additionally, U.S. political events and inflation data have impacted the market. As these factors continue to evolve, the crypto market could see further momentum in the coming weeks.
