Despite recent volatility and a drop to five-month lows, several key metrics indicate that Bitcoin's bullish momentum may still prevail, signaling potential price recovery ahead.
Bullish Divergence Strengthens BTC Rebound Prospects
Bitcoin started July with significant turbulence, plunging over 10.50% by July 7 to hover near $57,000. The dip to $53,550 was primarily driven by market concerns surrounding Mt. Gox repayments (140,000 BTC) and German government Bitcoin liquidations.
Technically, the decline revealed a growing divergence between falling prices and rising Relative Strength Index (RSI) values—a classic signal that selling pressure may be exhausting even as prices continue downward. This pattern often precedes trend reversals, suggesting Bitcoin could soon regain upward trajectory.
👉 Why Bitcoin's technical indicators matter now
Bullish Hammer Candlestick Meets Oversold RSI
Two additional technical signals support recovery:
- Hammer Candlestick Formation (July 5): Characterized by a small body with long lower wick, mirroring May's pre-rally pattern
- Oversold RSI (Daily chart near 30): Historically indicating consolidation or rebound phases. Analyst Jacob Canfield notes this could propel BTC back toward $70K+ levels.
Wall Street Bets on September Rate Cuts
Bitcoin's bullish case strengthens with rising probability (72% as of July 7) of Federal Reserve rate cuts in September—up from 46.6% a month prior. Slowing U.S. hiring typically prompts Fed monetary easing, which benefits risk assets like BTC by reducing Treasury yields' appeal.
| Metric | Value | Implication |
|---|---|---|
| Rate Cut Probability | 72% (Sept 2024) | Increased BTC demand |
| M2 Supply Growth | +0.82% (YoY) | Improved market liquidity |
Bitcoin ETF Flows Reverse Course
After two days of outflows, U.S. spot Bitcoin ETFs saw $143.1M inflows on July 5, led by:
- FBTC: $117M
- BITB: $30.2M
- ARKB & HODL: $11.3M/$12.8M
This resurgence signals renewed institutional confidence.
Miner Capitulation Hints at Bottom
Current miner sell-offs resemble December 2022's market bottom conditions:
- Hashrate dropped 7.7% to 576 EH/s (4-month low)
- Weak miners exiting may stabilize supply/demand dynamics
👉 How miner activity impacts Bitcoin's price
FAQ: Key Questions Answered
Q: Why is Bitcoin's RSI significant now?
A: Oversold RSI readings often precede price recoveries as selling pressure diminishes.
Q: How do rate cuts affect Bitcoin?
A: Lower rates reduce yields on safe assets, making high-risk/high-reward investments like BTC more attractive.
Q: What does miner capitulation indicate?
A: When weaker miners stop operations, it typically reduces sell pressure—a historical bottom signal.
With M2 supply expanding and technicals aligning, Bitcoin appears positioned for a substantive recovery phase. Market participants should monitor these fundamental and on-chain indicators closely.