Three Positive Conditions in the Bitcoin Market, but Recovery Trend Remains Uncertain - Wintermute

Key Points of This Article

• Three positive conditions, including recovery of capital flow, are in place.
• In options, bearish hedging is dominant.

Situation Improving, but Sustainability is Key

Market maker Wintermute released an analysis report on the recent cryptocurrency market on the 13th. While the market has temporarily halted its decline, it has not yet reached a recovery.

First, Bitcoin (BTC) has maintained a support line of $62,000 even amid U.S. airstrikes against Iran. Furthermore, the eight-week consecutive outflow of funds from the U.S. Bitcoin spot ETF has come to an end.

These two conditions were highlighted by Wintermute as necessary for market recovery. Specifically, (1) the market foundation, having progressed in deleveraging, can withstand adverse news without triggering a chain of selling, and (2) a reversal in capital flow.

Both of these conditions have now been realized. Additionally, the sale of BTC by the financial strategy firm Strategy had little impact on the market, which is the third positive factor mentioned.

Strategy sold a total of 3,588 BTC for approximately $216 million (about 35 billion yen) between June 29 and July 5 to secure funds for preferred stock dividends. This is the largest scale since reversing their policy of "never selling."

The firm sold only 32 BTC, which was far below this amount, for the first time since the policy shift at the end of May. This sale triggered selling in the market, but this time the market hardly reacted to the sale of 3,588 BTC.

Wintermute points out that the market previously worried about the sales by Strategy, but this has now shifted to an understanding that "the framework for Bitcoin monetization is functioning as designed."

On the other hand, Wintermute concluded that it is necessary to monitor whether the above situation can be sustained. To confirm a recovery trend, a sustained period of rising prices is required, rather than a temporary one.

They also noted that macroeconomic factors continue to have an impact. Oil prices surged on Monday, and the probability of interest rate hikes by the U.S. Federal Reserve and the Consumer Price Index (CPI) will also be important indicators moving forward.

Regarding the CPI, it was stated that being lower than market expectations could be a positive factor for cryptocurrencies. The U.S. CPI for June, announced on the 14th U.S. time, showed a slowdown in growth compared to the previous year and the previous month, leading to a retreat in interest rate hike expectations.

Additionally, in the Bitcoin options market, put options are more dominant than call options, indicating that traders are investing in bearish hedges against short-term events rather than pursuing upward trends.

Wintermute cited future factors such as capital inflow into ETFs and the situation in the Strait of Hormuz. Furthermore, the progress of the Clarity Act will also become important.

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