- Bitcoin ended July up about 7.5%, with further downside pressure easing after most leveraged positions were liquidated during the late-June selloff.
- Bitfinex said average daily liquidations have remained well below $400 million to $500 million after derivatives traders went through large-scale forced liquidations while leverage in the crypto market was already low.
- A $38 million Bitcoin theft tied to the Coldcard security breach and whether spot Bitcoin ETF inflows recover have emerged as key variables for short-term prices and August’s rangebound trading.
Forecast Trend Report by Period
Bitcoin ended July up about 7.5% despite headwinds including concerns about Federal Reserve rate increases and a security breach. Market participants said scope for further declines has narrowed after most leveraged positions were flushed out during the sharp selloff in late June.
On July 31, Bitcoin briefly fell below $63,000 intraday on Binance’s USDT market and was down about 3% on the day. Even so, it maintained a monthly gain of about 7.5%.
Bitfinex said the crypto market was carrying far less leverage than equities ahead of the Fed meeting. It attributed that to the wave of liquidations that hit derivatives traders during the late-June plunge, when Bitcoin dropped below $58,000.
“The fuel for forced liquidations had already been exhausted, so crypto fell less than leveraged equity themes,” Bitfinex added. Since then, average daily liquidations have stayed well below this year’s typical $400 million to $500 million range.
Meanwhile, fallout from a security incident involving hardware wallet company Coldcard remains a variable for the market to absorb. At least $38 million worth of Bitcoin was stolen in the breach. Paul Howard, a director at Wincent, said the stolen assets have not yet been sold, but the potential for future liquidation could weigh on Bitcoin prices in the short term. The incident also highlighted the operational risks associated with self-custody, he added.
Ahead of next week’s US employment data, a rebound in institutional demand has emerged as a key focus for the market.
Lacy Zhang, a research analyst at Bitget Wallet, said the market would struggle to hold up if a stronger dollar, rising real yields and weakening exchange-traded fund demand hit at the same time. Unless inflows into spot Bitcoin ETFs recover steadily, a rangebound market is the base-case scenario for August.