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Bitcoin Could See First Monthly Close Below 200WMA: What Is in Store for BTC in July?

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Bitcoin suffered yet another setback on Monday as traders withdrew from the market following a statement from SEC chair Gary Gensler classifying Bitcoin as a commodity. The remarks were made on the Squawk Box show hosted by Jim Cramer where the SEC chair went into depth on the importance of distinguishing between commodities and securities.

Gensler pointed out that even though a vast majority of tokens in the market exhibit attributes of securities, not all belong to this category. Bitcoin is one such that has been often mistaken for a security hence the proposition that it should be under the SEC’s jurisdiction. While he mentioned that other tokens fell in the same bracket, the dominant crypto asset is the only one he publicly commented on.

Bitcoin (BTC) off to a poor start this week but signs show July could be full of action

Market analysts caution that traders should also look ahead to new triggers next month which will heavily influence the price of the Satoshi creation. Former BitMEX co-founder Arthur Hayes expects Bitcoin and other crypto holders to feel even more pressure in the first week of July.

“By June 30, the Fed will have enacted a 75bps rate hike and begun shrinking its balance sheet. July 4 falls on a Monday, and is a federal and banking holiday. This is the perfect setup for yet another mega crypto dump,Hayes theorized in a blog post shared less than a fortnight ago.

Pseudonymous crypto trader Crypto Tony, on the other hand, opined that volatility in crypto and other risk markets will be felt right from the first week. The popular trader, in a Twitter post, surmised that this week will likely be a dull one as opposed to July which he sees being an “action-packed month for volatility”.

A decisive three days left

There are immediate concerns about the path which the flagship cryptocurrency will chart as the month draws to an end. The BTC/USD pair is currently hovering below the 200-week moving average – a trendline that has provided support in previous bear climates. Bitcoin has, even in tough markets, managed to stay above the 200 WMA barring occasional shadows (wicks) below it.

Stock-to-Flow price model creator PlanB foresees things becoming interesting in the remaining days as Bitcoin could set a first monthly close under this key level.

Source: Twitter

Worth noting, Bitcoin is also sitting in the buy zone of the Mayer Multiple – a metric defining how low the asset is trading relative to its 200-day moving average.

Source: Twitter

This is a rare occurrence as such instances have happened on only 0.2% of all trading days.

Glassnode: 2022 bear cycle has been the worst ever

It does add up that Bitcoin is tracking an unprecedented path in the red territory as Glassnode theorizes that the current bear market is the harshest in history. The firm published a report on Saturday comparing the downturn in the Bitcoin and Ethereum prices to past bear cycles. The report found that the year-to-date slump is one of the worst observed since BTC started trading on exchanges.

“The 2021-22 Bitcoin bear market is one of, if not the most significant in history, both in its severity, depth, and magnitude of capital outflow and losses realized by investors,” Glassnode analysts wrote.

The analysts also pointed out that price declines have birthed the first instance of both Bitcoin and Ethereum retracing below previous cycle ATHs.  In addition to plummeting below half the 200-day MA level during the current bear cycle, Bitcoin is also swinging below its realized price which further reflects the struggling asset’s price.

Spot prices are currently trading at an 11.3% discount to the realized price, signifying that the average market participant is now underwater on their position.”

Glassnode concluded that the crypto market is undergoing capitulation, a thesis also backed by the fact that miners have turned to actively selling their rewards as they seek liquidity to keep their operations running.

To learn more about Bitcoin visit our Investing in Bitcoin guide.

Sam is a financial content specialist with a keen interest in the blockchain space. He has worked with several firms and media outlets in the Finance and Cybersecurity fields.

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