Macro crypto currency market outlook

Bitcoin extended the recovery out from the 2022 low, pushing to a fresh yearly high in July. Overall, the outlook remains constructive while above the June 2023 low, with the next major upside extension seen into the $40k area. Ultimately, only a monthly close back below the June 2023 low would delay the bullish outlook.

There wasn’t too much going on with crypto markets in July. What we did see was a lot of consolidation and exceptionally low volatility. Many traders were off the desks enjoying vacations and a lot of this lackluster price action was chalked up to summer doldrums trade.

The good news here is that periods of low volatility reflect a market in peak accumulation mode, which often warns of a healthy rally ahead. Forward returns for bitcoin when volatility is this low have proven to be consistently positive.

One of the biggest stories in July was the US court decision that ruled partially in favor of XRP. The court determined XRP was not a security when sold to the general public. This portion of the decision was celebrated in the crypto space, giving hope to the idea that lawmakers would be more open to understanding the intricacies of decentralized assets.

There is still a long road ahead here, but we have since seen more productive attempts to build a proper regulatory framework in the US that will protect investors, while promoting the space and encouraging innovation.

Looking ahead, our biggest concern over the coming weeks is seasonality. Historically, there has been a consistent period of weakness in bitcoin from mid-August through September. Technically speaking, the recent break of multi-day consolidation support reinforces the prospect of deeper setbacks in the days ahead.

At the same time, we suspect any setbacks should be exceptionally well supported ahead of $25k in favor of the next big push to the topside, through the yearly high and up towards the next major extension target in the $40k area.

It’s possible an overdue bearish reversal in US equities could weigh on crypto assets in the weeks ahead. But at the same time, correlations between bitcoin and stocks have been less relevant of late and a downturn in stocks may not translate to crypto weakness.

The biggest potential positive catalyst for the space right now is the SEC approval of bitcoin ETF applications. The market is optimistic this will eventually get done, and an approval of an ETF of a well-established and well-respected name like BlackRock could really open the door to a huge wave of demand, ushering in the next major push for institutional adoption.