Bitcoin Market Revives After Free Fall

Last week, the crypto market once again proved how volatile it can be. After a relatively stable period, the market was rudely awakened by a sudden drop in bitcoin’s price. What began as a seemingly temporary dip below $60,000 became a week of deep losses. Is this just a temporary setback or the start of a longer period of uncertainty? Read more in this Weekly!

This weekly in brief: 

• Market: After a tumultuous plunge to $53,500 last Friday, bitcoin’s price cautiously recovered to above $58,000 this week. For renewed optimism, prices above $60,000 are needed.
• News: Despite last week’s price drop, American bitcoin funds remained strong. Nearly $400 million flowed into these funds worldwide. This week, too, the funds can count on investor enthusiasm.
• Behind the Scenes: Amdax is the first crypto company to partner with CERRIX, a GRC (Governance, Risk & Compliance) and Audit solution. Thanks to this collaboration, we can better protect our customers.

Market Update

On Monday, June 24, the crypto market took a significant hit. The price of bitcoin briefly fell to $58,500, about 10% lower than two days before. Was this the second and final dip below the price range of $60,000 to $73,800 that we have been in since February 28?

The answer came quickly. After a short recovery to $64,000, the crypto market came under pressure again last week. Wednesday, Thursday, and Friday were dark red days. On July 5, the price hit a low of $53,500.

At its lowest point, the price was 27% below the all-time high of March 14. This is the largest correction of this market cycle. Since the bottom of $15,400 in November 2022, we have not seen such a significant downturn. From a historical perspective, this is nothing to worry about. In previous bull markets, we often saw corrections of more than 30%.

This decline ends the scenario of a 'correction through time' where the market cools while the price remains within a narrow range for a long time. We now see a classic 'correction through price,' where an increasingly lower price tests investors’ convictions.

With the decline, the price fell below the 200-day average. In a bull market, this is quite rare; you could say bitcoin is cheap here. Our base scenario is that the bull market will continue later this year; most of the indicators we follow point to this.

The chart above highlights leaving the price range where we were for four months. That range may play a role again in the future when we rise above $60,000. Until then, we can look at the price in other ways.

The chart below shows the structure of the deepening correction, where we have now reached the bottom. It’s possible that we might see (slightly) lower prices within this correction structure. But it’s more likely that we will first enter a period of recovery.

Therefore, we look at the price levels above the current price that could provide resistance and need to be overcome on the way up. The first zone is around $59,000. The 200-day average runs there, along with several horizontal price levels, including the lower boundary of the price range at $60,000.

If we rise further, the second significant zone is around $64,000. If we break above that, it confirms a new short-term trend of higher highs and higher lows. We would also be above the realized price of the short-term holders and the 50-day average.

We will keep an eye on these two milestones on the way up. The market’s reaction to these prices will give us clues about what lies ahead. Do we see strong trading and optimistic sentiment? Then a further rise above $70,000 is likely.

News Overview

In April 1970, Apollo 13 began a mission to carry out the third manned landing on the moon. On board were astronauts James Lovell, Jack Swigert, and Fred Haise. What was supposed to be a routine flight to the moon quickly turned into a life-threatening situation.

Two days after launch, an oxygen tank exploded in the service module of Apollo 13, the spacecraft named after the mission. The oxygen leaking into space was necessary for breathing and generating power. The potential loss of two vital functions prompted Jack Swigert to utter the now-famous words: “Houston, we have a problem!”

The crew and the mission control center in Houston faced a massive challenge. The primary mission to land on the moon was immediately canceled, and the focus shifted to bringing the astronauts back to Earth safely. In the critical hours following the explosion, both the crew and the ground team had to make life-saving decisions.

The team in Houston, led by flight director Gene Kranz, had to act quickly. They realized that panicking and focusing on immediate problems wouldn’t lead to the best outcome. Instead, they had to – counterintuitively – pause, zoom out, and look at the bigger picture: how could they make the best use of the limited resources on board to bring the astronauts home safely?

From this emerged the plan to use the lunar module, originally intended to land on the moon, as a ‘lifeboat’ to keep the crew alive. This required complex improvisations, including direct adjustments to the systems controlling CO₂ levels and temperature.

After four tense days in space, Apollo 13 safely returned to Earth. On April 17, 1970, the astronauts landed in the Pacific Ocean, where they were rescued by the US Navy.

This story shows that in times of crisis and uncertainty, it’s essential to remain patient. ‘When in doubt, zoom out’ is often heard in the context of financial markets. Of course, a failed moon mission is far more urgent than falling prices on your screen, but emotionally, they can both cause a sense of emergency, doubt, and worry.

By zooming out and seeing the broader context, you prevent reacting to short-term volatility and market rumors. A well-known investor example of this comes from Warren Buffett, who invested heavily in Coca-Cola in 1988. When the company hit rough waters, Buffett’s long-term investment strategy kept him from making emotional and costly decisions. His stake in Coca-Cola became worth billions of dollars and generated significant annual dividends.

The rise, development, and adoption of bitcoin also have characteristics of a moon mission. But the journey that seemed impossible 15 years ago – the creation of a serious alternative to traditional financial systems – is well on its way.

When in doubt, zoom out!

Other News:

• American Bitcoin Funds Had a Positive Week: A total of $238 million flowed into the ETFs. Bitwise’s fund accounted for nearly half of the inflow. So far, ETF investors have been resilient to the whims of the crypto market. During the period when the bitcoin price fell nearly 30%, the outflow from the funds was minimal. Worldwide, bitcoin funds saw an inflow of nearly $400 million last week.
• South Korean Game Producer Migrates to Ethereum Rollup Immutable: This involves NetMarble’s Web 3 game platform MARBLEX and three games that together account for “1 million activities” per month. Nearly 2 million gamers use Immutable at least once a month. In June alone, 1 million gamers created a wallet on the platform, which notes in a blog post that it is experiencing remarkable growth.
• ETF Specialists Expect Ether Fund Launches “Within Two Weeks”: Last Monday, all applicants submitted an updated version of their application to the regulator. ETF Store president Nate Geraci expects trading in the funds to start the week of July 15. He hints at success. “The four most successful ETF launches in 2024 are all spot bitcoin ETFs. Others don’t even come close.”