Bitcoin Crashes to 5-month Low, But Is A Rebound Coming Next?

Germany keeps dumping Bitcoin, but Grayscale says catalysts still exist for a rebound

By: Zack Guzman

July 8, 2024

Bitcoin tanked another 10% last week to hit levels not seen since February after Germany continued its selling spree. This week: Grayscale sees reasons to still be bullish, Fed Chair Jerome Powell testifies in front of Congress, Republicans adopt crypto into their party platform, and Ethereum ETFs prepare for final tweaks ahead of a much-anticipated debut.

Watch Coinage discuss these stories and more in our usual Live News Digest with Grayscale’s Zach Pandl above.

Bitcoin’s Key Level Breached

Bitcoin is struggling to weather Germany offloading a more than $3 billion stash of bitcoin once seized from an illegal movie hosting site. On Monday, traders watched as the country continued to sell its holdings across a number of exchanges. By Monday afternoon, Germany’s stack had shrunk to just over $1 billion according to one tracker.

Today, analysts are now weighing whether the worst is now behind Bitcoin, considering more than $140 million flowed into Bitcoin ETFs on Friday despite the selloff. Grayscale’s Head of Research Zach Pandl joined Coinage to advocate that a bottom could be forming.

(Source: CoinShares)
(Source: CoinShares)

“We're at a point in this market which is common in lots of markets where you have the fundamentals going one way and technicals going another way. I think the fundamentals for Bitcoin still look quite positive,” Pandl said.

As Coinage has covered, Glassnode data shows recent bitcoin buyers start to feel the acuteness of losses in the $56,000 to $58,000 range. With Bitcoin falling below $56,000 it may be too early to call which way most traders are leaning.

ETH ETFs to The Rescue?

Yet another two amended ETH ETF S-1s were filed Monday morning (this time from VanEck and 21Shares.) July 8 was the deadline the SEC had set for issuers to get these in, so the ball is now back in the agency’s court on whether or not trading begins as early as the end of this week or next.

If that does indeed happen, Pandl further predicted it could be a shot in the arm for crypto prices. Analysts like Fundstrat’s Sean Farrell have said the market is underestimating the inflows ETH ETFs will attract.

“What we saw is that those inflows had a quite dramatic effect on Bitcoin's price in the first half of this year and so I think it would be mistaken to be overly concerned about Ethereum right in front of an event like this,” Pandl said.

Fed Chair Jay Powell to The Rescue?

Fed Chair Jay Powell is set to testify in front of Congress this Tuesday and Wednesday. Many are expecting him to continue signaling rate cuts could come later this year as more progress is made to reel in inflation. Friday’s job report also showed signs of the labor market softening, which again boosted stocks to all-time highs.

Pandl said any signal that the Fed is getting closer to cutting rates is likely to give an even greater lift to crypto prices.

“If they're lowering [interest rates] that will be positive for Bitcoin and we've seen exactly this pattern play out over the last couple of years,” he said.

Republicans to The Rescue?

The Republican party officially included mention of crypto in their early party platform draft in a first for a major political party.

“Republicans will end Democrats’ unlawful and un-American crypto crackdown and oppose the creation of a central-bank digital currency,” the document, released Monday, reads. “We will defend the right to mine bitcoin and ensure every American has the right to self-custody of their digital assets, and transact free from government surveillance and control.”

Increasingly, positions on bitcoin and crypto are becoming solidified along party lines, with Democrats not nearly being as favorable in defending the industry.

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