Bitcoin ($BTC) has seen a significant price surge over the weekend, climbing above $62,000 and signalling a robust recovery in the broader cryptocurrency market.
The leading cryptocurrency is currently up nearly 8% in the last one week, nearing the $63,000 mark. This surge marks Bitcoin’s highest level since 2 July.
Earlier this month, on 5 July, Bitcoin experienced a sharp drop to $53,550, its lowest point in five months. This was driven by bearish factors such as the much-anticipated Mt. Gox repayments and a selling spree initiated by Saxony.
The recovery is noteworthy as it represented a turnaround from a period of significant volatility and pessimism.
The sell-off initiated by Saxony, along with the looming Mt. Gox repayments, had cast a shadow over the market.
Additionally, cooler-than-expected US inflation data has likely contributed to the improving sentiment.
Speculation within the cryptocurrency community has also been sparked by rumours of China potentially lifting its ban on Bitcoin.
This development was described by Galaxy Digital CEO, Mike Novogratz, as potentially “a huge deal”, although he also cautioned against taking these rumours at face value.
Factors behind the rise
A key event that triggered the price of Bitcoin to rally was the assassination attempt on former US President and current Republican presidential candidate Donald Trump.
Shortly after the event happened, a broader market rally was noticed, with notable price jumps in other major cryptocurrencies such as $ETH, $SOL, $BNB, and $TON.
Meme coins related to Donald Trump also saw massive surges after he disclosed being shot in the upper part of his ear over the weekend.
Photos circulated online showed a defiant Trump fist-bumping the air immediately following the attack, with blood trickling from the side of his face.
This dramatic scene created a “Trump bid” to risk markets, as noted by Rich Rosenblum, co-founder of trading firm GSR.
Rosenblum emphasised that political volatility is often a catalyst for Bitcoin buying, stating, “An assassination attempt on the leading Presidential candidate of the US is an affront to democracy globally and reminds people of just how fragile the status quo is today”.
Trump’s pro-crypto stance stands in stark contrast to that of his opponent, President Joe Biden. His advocacy for the crypto industry has bolstered his support among crypto investors and bettors, who believe his potential election victory could lead to more favourable regulatory conditions for the sector.
A bullish trend predicted
With Bitcoin reclaiming ground above the $62,000 mark, analysts suggest that the worst of the recent selling might be over.
eToro market analyst, Josh Gilbert, cited Trump’s increased odds of winning the upcoming election as a key driver of positive price action in the coming months.
“We’ve seen weakness in the last few months, but I think the worst is likely behind us. Any short-term weakness is likely to be bought with this in mind, alongside the tailwind of an ETH ETF and, of course, a more pro-crypto US party potentially being elected,” Gilbert said.
The founder of the crypto education platform Collective Shift, Ben Simpson, believes Bitcoin’s “local bottom” has now been formed and foresees an uptrend.
Simpson pointed out that $BTC’s price had been hammered by a deluge of “forced selling”. This largely stemmed from nearly $3 billion in sales by the German government and negative sentiment surrounding approximately $8.5 billion in Mt. Gox creditor repayments.
“Generally, I just felt there was a very big mismatch between sentiment and fundamentals”, he said, noting that the Crypto Fear & Greed Index had fallen to its lowest level in 18 months when Bitcoin wavered around $59,000 on 12 July.
Looking ahead, Simpson identifies several key catalysts as bullish for Bitcoin’s price in the coming weeks and months.
“Jerome Powell is hinting towards potentially lowering rates at some point soon. We’ve also got the S&P 500 ripping to new highs amongst all of this as well as strong Bitcoin ETF inflows flowing back in”, he said.
Over $360 million in leveraged short positions on Bitcoin were also liquidated as the cryptocurrency broke through the $62,000 mark, according to Coinglass data cited by Apollo sats founder, Thomas Fahrer.
On-chain data supported the bullish outlook as well, showing that Bitcoin whales accumulated more than 71,000 $BTC in the past week.
This accumulation occurred despite short-term holders capitulating, presenting a lifetime opportunity for long-term holders to accumulate more coins.
As the market recovers, analysts see potential for further gains supported by strong technical indicators and increasing accumulation by significant market players.
