10xResearch: Is The Bitcoin Trump Pump Sustainable?

10xResearch2024/07/01 06:16

By:Markus Thielen

Institutional Crypto Research Written by Experts

👇1-10) In our June 25 report, ‘Bitcoin Is Holding The Line – For Line!‘, we wrote that “Bitcoin is deeply oversold,” and technically, all three reversal indicators flipped to bullish shortly after. The Ethereum ETF approval has been pushed out to around July 8, pushing out the date to ‘sell the news’ while Biden’s performance during the presidential debate has also supported Bitcoin.

Bitcoin’s RSI (relative strength index) - a temporary rebound?

👇2-10) Bitcoin has rallied +4% as US President Biden refuses to let other Democratic candidates run against former President Trump. Biden’s family is reportedly supporting his reelection candidacy – and so is every Republican, as the prospect of Biden beating Trump in the November election appears small.

👇3-10) Polls also indicate that even if Biden drops out of the race soon, another candidate, such as California governor Gavin Newson, would lose against Trump. Under his watch, California has become a mismanaged state. Many tech companies have been leaving the Golden State; crime has become rampant, while the homeless population has exploded. California is no longer the state America looks up to, making it unlikely that the US voters will elect a candidate from that state.

👇4-10) Although Trump is not the ideal choice for many Americans, he is the only viable choice (at the moment) and has enough popularity to win the election. As Biden has already secured the Democratic delegates (3,904 out of 1,976 to win the nomination), it is solely in Joe Biden’s power to decide if he will run. After consulting with his family, especially his son, Biden agreed to run on Sunday, and this caused the Bitcoin rally over the weekend.

👇5-10) Seasonally, July is still a positive month for Bitcoin, followed by weaker August and September. This keeps us alert that Bitcoin could still drop to 55,000 in the weeks ahead - despite the weekend pump. A short-term reversal trader might have bought the recent drop near 60,000, but we still expect lower prices in the medium term.

👇6-10) Technically, the 21-day moving average sits at 63,750 as the first level to reconsider the bearish view, while our trend model currently has a (moving) stop at 68,900. The 61,500/61,800 is such an important area that we are not surprised that an attempt is made to keep prices above this level.

Bitcoin’s 21-week moving average (61,882)

👇7-10) Bitcoin mining companies also experience outages during the summer when the electric grid heats up - especially in Texas, where many mining companies are located. This year could play out similarly as temperatures are already near record levels. Last year, Marathon Digital peaked on July 9 and dropped by 45%, while Riot dropped by 50%. This could lead to further selling pressure from miners to fund their operations as prices approach the 60,000 breakeven price for the Bitcoin mining industry.

👇8-10) Unlike earlier this year, Bitcoin balances on exchanges have also increased during the last week (+18.5k BTC). However, the 30-day flow is still negative (-12.5k), significantly less than the -100k we saw a few weeks ago. Often, an increase in balances on exchanges signals a willingness to sell those once Bitcoin moves through the stop level or reaches a level seen sufficiently high to take profit. This could explain the weekend pump, whereas only three thirty-minute intervals caused the whole +4% rally. Someone might have tried to push up prices to sell more coins at higher levels.

👇9-10) The critical money flow indicators also do not signal sustainable liquidity entering the crypto market. Circle’s USDC has seen notable outflows during the last week, which appears to be associated with an offramp from crypto back into fiat. The widely quoted Bitcoin ETF flow data from Farside appears no longer reliable as Blackrock’s IBIT data is frequently not registered. While Farside indicates that IBIT has accumulated $17.7bn since the January launch, Blackrock indicates $18.4bn—a difference of $700m, which is better than reported.

👇10-10) We certainly see Trump's leading in the polls as positive, and if he wins the election (which appears likely), it will also be positive for Bitcoin and the industry. However, based on our money flow data and the technical setup (see out 10 reasons Bitcoin could drop to 55,000), we still expect a consolidation ahead. Mt. Gox flows are potentially starting this month, and other entities (German government) are also selling. The increased balances on exchanges and a potential decline in stablecoin growth could be leading indicators to watch.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.