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Bitcoin: the start of a Bull run?

Photo of: Joseph Stone
by Joseph Stone

After a pullback to $36,700 in yesterday’s session, Bitcoin is bullish again. Its price has just passed the $40K mark at the time of writing this article. BTC seems to be consolidating above this psychological threshold as this is the first time in two months that the crypto has ridden above $40,000 twice in a row in three days.

If the “short squeeze” argument made it seem like Bitcoin’s jump was short-lived, this new bull suggests that BTC’s price seems to be driven by other, much more fundamental factors. Amazon’s denial certainly had a bearish impact intraday but did not weigh on the price of the leading crypto for long.

What is the white angel carrying Bitcoin? Can we believe that the crypto has finally set in motion a bullish movement even if it means favoring a return to $64K? The least we can say is that a drop to $20K seems less and less likely.

Despite the recent Peak in the crypto universe, institutional investors continue to disengage from crypto funds. According to Coinshare’s Weekly Digital Asset Capital Flows report for the week of 19-23, institutional crypto products had seen their third straight week of capital outflows. This time, outflows totaled $28 million, a 170% increase from the week of July 12-16 when outflows were valued at $10.4 million.

Bitcoin topped the list of cryptos that recorded more de-exposure. BTC outflows for the week of 19-23 account for nearly 85% with an estimated $24 million. On a monthly basis, Bitcoin outflows are estimated at 49 million.

Will institutional investors this week gain exposure to bitcoin funds which seem to be building a trend line above $40K? Last week, even with positive signals, they had continued to disengage. Coinshare had noted in its report:

Last week’s outflows suggest that negative sentiment still permeates the asset class despite more recent constructive comments from major industry players.

Bitcoin is taking the other cryptos in the market by storm with its strong performance. Ethereum (+5.07%), BNB (+3.19%), ADA (+3.45%), Doge (+3.09%) and UNI (4.20%) are all up.

DeFi’s tokens are not yet showing double-digit growths as was the case for bull over the weekend. After two long months of falling, Internet Computer Protocol follows up with a rise of (+13%). Axie Infinity continues to climb to the sky.

On a macro scale, the crypto sector is growing by 6.06% with an estimated market capitalization of $1.54 trillion. While still a far cry from May’s $2.5 trillion, consolidation of this rise could help the sector test even higher levels.

The monetary policy posture adopted by the Fed could have an impact on the Bitcoin price. If the U.S. central bank were to make accommodative monetary policy statements, it would certainly push the dollar back down. This in turn would have a positive impact on the price of Bitcoin.

On the other hand, if Jerome Powell were to speak in a hawkish tone instead, the dollar would gain in value in the market, which would penalize the consolidation above the $40K mark for Bitcoin. Everything could come into play for the Bitcoin price during this meeting. Investors are already keeping their fingers crossed for the Fed’s decision.