Dmitrii Muradov, the chief investment strategist at ICBF, analyzed the behavior of Bitcoin’s price over the past week and shared his forecasts for the near future.

The fourth week of July continues with intense and almost-unabated growth of Bitcoin. And it is worth saying that the current increase has obviously brought a long-awaited revival to the entire cryptocurrency market. The Bitcoin bulls have gathered together and broke through the defensive redoubts of the bears at around $6,850 during their third attempt and simultaneously took a significant height of $7,000, and then climbed much higher to the current mark of $8,200 (see Figure 1).

Graph 1. All of the following graphs were prepared with the help of  TradingView.
Graph 1. All of the following graphs were prepared with the help of  TradingView.

The bulls have taken charge, but are they here to stay? Does this mean a global reversal for Bitcoin and a further ascent to the former vertices of $10,000, $12,000, $17,000, or even to the historical maximum of $19,891 (see Chart 2)? What will the end of this unexpectedly frisky July bring? It is desirable to have answers to all of these questions, so let's examine the market together.

Figure 2.
Figure 2.

As predicted by me a month ago, after a short correction within the global downtrend and the first approach to the $6,800 and $6,850 marks from June 19 to June 21, Bitcoin could not overcome the resistance and gain a foothold higher, and instead sharply rushed downward, breaking a significant support level at $6,000, and tested the forecasted target of $5,800.

Along with this, pushing away from the value set in the last days of June, the main benchmark of the cryptocurrency market has successfully been broken and again, for the second time, the price approached the $6,800 and $6,850 marks, which, most likely, was due to the repurchase of Bitcoins for the closing of both monthly and semiannual short positions in Bitcoin futures (with the expiration date falling exactly on June 29, the turning point from the minimum values, see Figure 3). The price may have also been influenced by the fixing of profits after semiannual returns were calculated by investment funds and other participants in the crypto market.

Figure 3.
Figure 3.

After that, Bitcoin again briefly rolled back, but only to return to the levels of $6,800 and $6,850 and from the third attempt, successfully and quite powerfully overtook them both with a significant height of $7,000 and reached the current position (see Figure 4).

Figure 4.
Figure 4.

It could have happened because of many factors, but I will suggest the main ones, in my opinion, and I will explain them from different points of view.

From a technical point of view, it could be a clear development of the “Inverse Head and Shoulders" formation (see Figure 5). In this case, it is a strong sign when this inverted pattern is executed to the end and shows a rebound to the “neckline,” which has not happened yet, and that can indicate the weakness of this figure.

Figure 5.

 From a technical point of view, it could be a clear development of the “Inverse Head and Shoulders" formation (see Figure 5). In this case, it is a strong sign when this inverted pattern is executed to the end and shows a rebound to the “neckline,” which has not happened yet, and that can indicate the weakness of this figure.

 From a fundamental point of view, after two short futures months in a row (due to the closing of the semiannual futures contracts), the bullish month of the upswing has arrived (see Figure 3), but it still has not canceled the universal downtrend.

 From the behavioral point of view, the current situation may be another lure from the bears (sellers) to catch a new group of bulls (buyers) into a bear trap and wreck them with a downward plummet. In order to lure them as high as possible, once again, it is necessary to strike with all their might and push the price down, thereby shaving off their deposits and again receiving a substantial profit by the end of the month.

The next few days will show us what will come out of all this, and the closing price of the week is likely to determine the direction of price movement for the next ten days, thereby refuting or confirming its bullish trend and green color. Which, by the way, can signify the long-awaited premise of a possible reversal of the overall trend towards long-term and confident growth.

So far, the situation is the same. Market turnover has increased, and if at the end of last month they amounted to about $12 billion per day, their current value in the region of $19 billion can be identified as relatively high (see Figure 6).

Figure 6. Source.

Trading volumes on the three largest crypto exchanges in recent days also increased significantly and reached $1.2 to $1.7 billion against $0.6 to $1.2 billion (see Tables 1, 2, and 3) a month earlier.

Tables 1, 2, and 3. Source.

And if in the near future, trading volumes do not fall again, this may be a sign of the return of interest in the market and the emergence of that very fundamental “desire to buy.” This desire will help to maintain prices at current levels and, perhaps, warm up the additional interest of third-party players, who, in turn, can contribute to the development of the positive trend.

The news agenda, on the fundamental side, can also sway the current situation in favor of growth. I will note only a few of the most critical factors from the news feed of recent days. On August 10, the SEC can approve the request of the CBOE exchange for the creation of an exchange-traded fund (ETF) for Bitcoin. Its launch will attract new large (including institutional) investors, most importantly, with a significant investment horizon, since one share will cost about 25 Bitcoins, which is about $185,000 to $200,000 at the current rate. It should be noted that the launch of exchange-traded funds for gold in its time had an extremely positive impact on the price of this asset, and the successfully obtained permission to launch an ETF for Bitcoin could serve as an impetus for a significant expansion of the market.

In the near future, important releases will occur for the technological update of the main blockchain networks (Lightning Network for Bitcoin and Casper Protocol for Ethereum) designed to increase the speed and capacity for transactions and reduce their costs. Along with that, more and more blockchain wallets emerge, and these two facts can also contribute to a possible reversal and ensure further growth of the market.

The continuing flow of news about patents for technological solutions in the practical application of blockchain, tokenization, data protection, and cryptocurrency transactions by the largest international companies and banks is also adding optimism. Mastercard was granted a patent for their technology for the acceleration of cryptocurrency transactions, which involves the introduction of a new type of user account that will be able to carry out such transactions. The cherry on this digital cake was the official announcement of the appointment of David Solomon, who has previously shown considerable interest in Bitcoin, as the general director of one of the world's largest investment banks Goldman Sachs.

Thus, taking into account the factors mentioned and all possible perspectives, let me propose the following forecast (see Figure 7). If Bitcoin closes this week at current values ​​or higher, and even more so if it overcomes the next resistance zone, and next week starts a moderate correction with a further rebound from these significant levels up, then we can confidently talk about some serious prerequisites for healthy growth of the main cryptocurrency’s rate, and after it, along with the increasing volumes of trading, the entire cryptocurrency market.

Figure 7.

But all of this is a matter of a very near future, which will surely come. In the meantime, let us relax, wait, and look at the graphs again. The big finale is just around the corner.