Bitcoin had a strong start and end to the trading week, with its price appreciating over 16% on the CME Future Exchange. The Sunday evening open saw a momentous “gap-up open” in price. A gap up occurs when the opening price in a new trading session is significantly higher than the closing price in the previous session, resulting in a gap on the price chart that indicates a sharp upward movement.

After closing weakly last Friday evening at $57,800, the Sunday futures market opened approximately 5.5% higher at $61,000, indicating a powerful $3,000 move over the weekend. On the spot ETF front, they also experienced an abnormally large gap up, with Blackrock’s IBIT fund opening the NYSE session 9% higher, reflecting another leg higher in bitcoin during the Asian and European market sessions.

The sharp move in bitcoin prices over the previous weekend is largely attributed to a geopolitical event: the assassination attempt on former President Trump during a campaign rally in Pennsylvania.

After news broke that Trump survived with only a minor injury, presidential betting odds soared on various prediction markets and betting websites. On Polymarket, a crypto-based DeFi prediction market, his odds of becoming the next US president surged to as high as 70%. This provided a noticeable boost to bitcoin and the overall crypto market, as news quickly spread and high-frequency trading (HFT) algorithms responded to the rapid-fire events by buying bitcoin.

Trump’s campaign has recently adopted a very pro-bitcoin and crypto stance, with promises to loosen crypto regulations within the US. As prediction markets began to price in a higher likelihood of a Trump presidency, there was a notable correlation with the increase in crypto prices.

After Monday’s strong open, prices mostly consolidated for the rest of the week until Friday, when bitcoin experienced another surge of over 6%, ending the week at $67,480.

Spot ETF Flows Regain Momentum

This week saw positive ETF flows on every trading day, extending the streak to 11 consecutive days of positive flows since July 4th. Blackrock’s IBIT bitcoin ETF led the way with over $260 million in inflows on Tuesday, followed by ARK Investment Management’s ARKB fund, which received $117 million the day prior. As of July 19, total net assets stood at $60.5 billion, just $1.8 billion, or 3%, away from the all-time high of $62.3 billion seen in early June.

Another statistic worth noting is the actual spot bitcoin being held on-chain by ETF issuers. This week saw a record high of on-chain holdings, with close to 900,000 bitcoin held by various ETF issuers in the US. This is a vital statistic because, although bitcoin is still about $7,000, or 10%, away from breaking above its all-time high of $74,000, spot ETF holdings are at unprecedented levels.

This implies that institutional investors have been buying the dip to $53,500 the week prior.

BTC Futures Open Interest Surges Higher

A vital metric that has regained momentum is open interest (OI) on leveraged futures exchanges. An increase in open interest, especially when accompanied by rising prices, typically implies increased bullish sentiment, with more traders entering into long positions.

This could also be viewed as confirmation of a trend reversal from bearish over the past couple of weeks to a more bullish direction. As of Friday, total open interest aggregated across all exchanges stood at close to $36 billion, just $1 billion away from the record-high OI of $37 billion recorded on June 6.

Bitcoin Exchange Balance

After a brief increase in the amount of bitcoin held on exchanges early in the month, there has been a notable decline in exchange balances. This is another bullish sign, as typically, when exchange holdings decrease, it implies traders and investors are buying and moving bitcoin off exchanges and into cold storage or other private wallets.

On-chain metrics and chart technicals suggest that the market environment has shifted to a more bullish posture. In last week’s newsletter, we pointed out that July is, on average, a positive month for bitcoin, with an average return of 6.67%.

As of this writing, we are trading right around that figure, with bitcoin up 7% for the month as of July 20th. Let’s see if prices can sustain this level through the end of the month.

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