Cryptocurrencies bounced back in July, experiencing notable gains during the first several weeks, seemingly breaking free from the downward trend they had been enduring for months.
This rally took place as the digital currency industry benefited from several positive developments, including news that the world’s largest asset manager BlackRock is considering establishing a working group to investigate digital currencies and blockchain technology.
Markets also responded to an announcement that investment bank Goldman Sachs named a CEO receptive to these innovative technologies to succeed Lloyd Blankfein.
During the month, the broader digital currency market rose by as much as 20.6%, according to the MVIS CryptoCompare Digital Assets 100 Index (MVDA), a key benchmark based on the value of the top 100 largest digital assets. This measure peaked on July 25, when it hit 3,269.24, up from 2,709.89 at the start of the month.
Amid these positive developments, several market observers that the attitudes of traders had improved. Jon Pearlstone, publisher of the newsletter Cryptopatterns, spoke about this perceived trend. He stated:
Overall positive sentiment returned to the crypto market with many positive developments including increased institutional interest in cryptocurrencies.
Nate Flanders, co-founder of Mandala mentioned “a significant shift in momentum.” He added that:
We are witnessing volatility come back to the market and it is a good thing for the longs, the hodlers and the investors.
Flanders emphasized that while we aren’t out of the woods yet, this is certainly progress.
Of all the top digital currencies, none did more to illustrate this resurgence than Bitcoin, which outperformed its peers and produced notable gains.
The digital currency, the world’s largest by market capitalization, reached an intra-month high of $8,485.71 on July 24, CryptoCompare data reveals. At this price, Bitcoin was up 33% for the month. It later pulled back, finishing July at $7,550.05, 18.3% higher than at the beginning of the month.
David Grodsky, president of Cryptopatterns, offered some technical analysis on the cryptocurrency.
During July BTC broke out of a multi month downward trend blowing past multiple resistance levels before stalling as our pattern technical analysis anticipated at the key price level of $8500, which remains the primary resistance level.
He added that “BTC is now in the process of ‘retesting’ the strength of the current bull move. The first support to watch to resume the move higher is the $7250 range. If price falls below that the next support to maintain a bullish outlook for BTC is the trend breakout level of $6800.”
While Grodsky cited technical indicators when explaining the digital currency’s price movements, crypto analyst Marius Rupsys pointed to market factors, stating that “Bitcoin is acting more as a commodity driven by supply and demand.”
He elaborated, stating that “Large bitcoin holders are not willing to sell at low prices, therefore there is no supply of coins. Given more and more individuals and institutions want to have some exposure to the asset, this creates supply and demand imbalance which moves bitcoin price upwards.”
While Bitcoin experienced some notable price increases during the month, Altcoins did not share in these gains, with both Ether and EOS suffering losses for the month. Grodsky said:
The altcoin market did not keep pace with BTC's rally and instead of retesting bull breakout levels, key altcoins like BCH, EOS and ETH are in danger of falling to new 2018 lows against both the US dollar and vs. Bitcoin.
He added that “the current technical patterns for altcoins show no clear signs of a bottom and support extreme caution and a ‘wait and see’ approach to determine if altcoins are at risk of much lower prices.”
Bitcoin Cash was highly volatile last month, reaching $888.76 on July 17, additional CryptoCompare figures show. Upon attaining this intra-month high, the fork of Bitcoin was up 19.7% from the start of July and more than 34% from the intra-month low of $662.77 hit on July 12.
By the time the month was over, this altcoin had retreated somewhat, trading at $744.69 and eliminating almost all of its July gains.
Ben Marks, founder and CEO of crypto hedge fund Blocktrade Capital, weighed in on the low price correlation that Bitcoin and Bitcoin Cash experienced during the month.
“I personally have never seen a correlation between Bitcoin and Bitcoin Cash prices,” he stated, adding:
When Bitcoin debuted a year ago, everybody assumed that anything leveraging the ‘Bitcoin’ name would trade parallel to Bitcoin. This has not been the case, though it could be separately argued that Bitcoin forks have been much more successful than any other coin’s forks.
Like Bitcoin Cash, Ether experienced significant price movements last month, appreciating to as much as $515.14 on July 17, at which point it had risen 13.5% from the start of July and 23.2% from its intra-month low of $418.02.
By the time July was over, Ether, a digital currency that powers decentralized application platform Ethereum, had fallen to $420.64, down 7.3% for the month.
“ETH in particular has been a critical indicator for the strength of the altcoin market,” said Grodsky, emphasizing that “as of now,” it is “showing relative weakness vs. BTC and other large altcoins.”
EOS is another cryptocurrency that suffered substantial volatility in July. This digital asset fell to as little as $6.56 on July 12. At that level, it was down roughly 18.5% from the start of the month and more than 30% from its intra-month high of $9.44. When July ended, EOS was trading at $7.14, down more than 11% month-over-month.
To explain these price movements, analysts pointed to a few key developments. EOS appears to have entered a downward trend right around the time the digital currency’s mainnet went live on June 10. Over roughly the next month, EOS lost more than 50% of its value as it plummeted to nearly $6.50.
Another variable cited as affecting the cryptocurrency’s price was Circle’s decision to add EOS to its Poloniex exchange, which eToro U.K. managing director Iqbal Gandham described as providing significant tailwinds for the digital asset.
‘A Breath Of Fresh Air’
Crypto investors should be on the lookout for “continued progression or stair casing” and steadily improving market sentiment, said Flanders.
He added that “market participants should continue to be cautious but as mainstreet continues to stream positive news into the space, a breath of fresh air has hit the market. What participants are really looking for is, regulatory certainty, and I think that it is coming.”