The last two weeks showed what the market needs. A two-week consolidation allowed the industry to stabilize and begin to properly function. Bitcoin reached a swing high of $22,300. The first week of July recorded an all-time record outflow of BTCs from exchanges, and miners began to earn more by stabilizing the cryptocurrency. As of July 13, Bitcoin has acquired a downward trend with increasing bearish momentum.
The current decline is due to the consumer price index and the rhetoric raised by US officials. Investment activity is reducing in the crypto market and Bitcoin waits for the decoupling of the inflation rate situation. The main problem with cryptocurrency at the current stage is the fundamental news background and the fear of big investors of inflation and aggressive Fed policies. Anyway, the Bitcoin market is becoming more attractive for all investors.
The current downtrend is gaining momentum due to the lack of visible resistance. Buyers are reducing their presence in the market in order to protect capital ahead of the CPI release. This allows sellers to accumulate the necessary volume and push the price down. Overall, Bitcoin is attracting more and more investors, as evidenced by the record accumulation rate, which is equal to about 3% of the total number of BTC coins in circulation. Glassnode experts also noted that speculative investors with large amounts of borrowed funds were still observed in the market. This negatively affects Bitcoin's medium-term prospects and increases volatility in the market.
The influx of speculators occurred over the past two weeks when the market and Bitcoin were relatively calm. Glassnode and JPMorgan experts note that the BTC market is mostly cleared of players with short-term goals. However, key metrics have the potential for further price declines. When a local bottom is forming, the percentage of losing coins by long-term players reaches the 35% level, and as of July 13, the figure reached 28.5%. The losses of coins of short-term investors decreased to 4%, and now this figure is 16%. In other words, the market has enough potential for further decrease and a retest of $17,700.
As for the medium-term outlook, cryptocurrencies are in the final stage of forming a local bottom. The process takes place in two stages. At first, there is a capitulation of retail and speculative investors under the pressure from fundamental factors. Subsequently, the released volumes pass into the hands of long-term investors who take the minimum part in sales. At the end of June, JPMorgan said that most of the speculative investors had left the Bitcoin market. Then we witnessed a two-week consolidation, which ended with a retest of $22,300.
This suggests that the Bitcoin market needs to go through another wave of decline to get rid of speculative investors and borrowed funds. The asset will need a certain period of consolidation to make the transition of free volumes of BTC coins to the wallets of long-term investors. As of July 13, the first part of the plan to beat out speculative investors is about 75% complete. This means that we expect another round of decline with the evasion of short-term investors and partially miners, and then the start of a protracted period of consolidation with a gradual breakthrough of the range of $19,000-$22,000.