It has been a slow week for bitcoin markets following last week’s double-digit decline — the most significant weekly drop in over 10 months. This week, bitcoin managed to recover some of the previous losses, rising by 2.05%.

The most dramatic price action occurred during the weekly futures open on Sunday night, when bitcoin dropped to $54,500, nearly retesting last week’s low of $53,500. Fortunately for the bulls, buyers stepped in by the time world equity markets opened overnight Monday, ultimately driving prices up to nearly $58,000 before the NYSE opened.

200 Day Simple Moving Average Resists Bitcoin’s Upwards Advance

The 200-day SMA (simple moving average) is a popular technical indicator used across all asset classes, generally acting as a reliable marker of the macro trend of a particular asset. When the price is above the 200-day SMA, it is considered to be in an uptrend, while it is considered to be in a downtrend if below the 200-day SMA. As seen in the chart above, the 200-day SMA (illustrated by the green/red ribbon) has been acting as resistance for bitcoin’s price since diving below it on July 4th.

Twice this week, buyers attempted a push above the 200-day SMA, but were ultimately overwhelmed by selling pressure on both attempts. On Wednesday, bidders pushed the price above the 200-day SMA (currently at around $59,000), driving the price as high as $59,500 during the early morning hours. The advance stopped there, as sellers took over and drove the price back down to the mid-range at $57,000.

Bulls made one more attempt Thursday morning during the inflation data release in the US pre-market but were once again rejected slightly higher at the $59,650 region. To end the week, bitcoin finished just shy of the $58,000 mark, about $1,000 below the 200-day SMA. In previous market phases, the 200-day SMA has been a reliable marker of overall uptrends or downtrends. Bulls would need to see a daily close above $59,000, especially the $60,000 psychological level, to bring more buying momentum back to bitcoin.

Fundamental Macro Influences

The other week, we were discussing how Germany’s government may be adding to the selling pressure in the bitcoin markets. This week, it was revealed that the German state of Saxony is nearing the end of a significant bitcoin liquidation, having transferred 10,567 BTC (over $600 million) to various exchanges on Thursday, reducing its holdings to 4,925 BTC from the initial 50,000 BTC.

This selling spree may have been a major factor in bitcoin’s recent 15% price decline, as investors feared the supply overhang. These concerns were compounded by the U.S. government moving $240 million worth of Silk Road-related bitcoin to Coinbase and Mt. Gox starting repayments of 140,000 BTC last week as well.

As Germany’s sales come to an end, this may lead the market to see stabilization.

Spot ETF Flows Update

Bitcoin spot ETF flows had a consecutive second bullish week in a row, despite recent bearish price action. This past week featured all five trading days with positive net inflows.

Over $1 billion in net inflows came in cumulatively across all the US spot ETF products over the past week, with BlackRock’s IBIT fund leading the charge, taking in $187.2 million on Monday, $121 million on Tuesday, and $120 million on Friday.

Fidelity’s FBTC fund provided strong support, taking in $91 million of flows on Tuesday and an additional $115.1 million on Friday. It appears that buying from US spot ETFs is absorbing some of the pressure coming from the Mt. Gox and German government selling that we saw over the past two weeks.

July Return Data

According to data provider Coinglass, the average monthly July return for bitcoin stands at 6.67% going back to 2013. With a little over half the month left to go, and bitcoin being down 8% on the month, bitcoin would need to rally by 14% in the remaining weeks to achieve this average return and bring it above the vital 200-day SMA.

With the FUD from the Mt. Gox and German holdings selling nearly behind us, let’s see if bitcoin can achieve a come-from-behind win to finish off the month of July.

‍