Why is Bitcoin price up today?
Bitcoin’s resurgence is driven by two key factors: the German government running out of BTC to sell and a weakening US dollar.
Bitcoin's
BTC
$60,245
comeback from its five-month low is still gaining momentum on July 13, with the cryptocurrency rising approximately 1.70% intraday to around $58,885.
Driving this resurgence are several key factors: the German government's near liquidation of its total 70,000 BTC holdings and a weakening US dollar amid a growing deficit.
Bitcoin investors absorb nearly $2.5B
The German government has approximately 9,100 BTC left after selling over $2.5 billion worth of BTC since June 17. During this period, Bitcoin's price dropped by about 12.70%, followed by a notable recovery of over 10% in the past eight days.
In contrast, institutional investors have been buying Bitcoin at its local dips, according to Cauê Oliveira, an analyst tied to on-chain data service CryptoQuant.
In a Quicktake blog post on July 11, Oliveira cited a rapid increase in wallet balances holding between 1,000 and 10,000 BTC since June’s beginning, including when the German government was selling BTC.
Notably, the cohort added over 10,000 BTC worth $5.7 billion during the period, aligning with BTC’s 23% price decline. This raises anticipations that these so-called "whales" have been buying the Bitcoin dip below $60,000.
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“While many novice investors capitulated last week, particularly those who bought coins between one and three months ago, institutional players engaged in the largest accumulation process since March,” Oliveira summarized.
This data hints at Bitcoin's potential of bottoming out near its recent market lows at around $56,700.
Dollar dips to lowest levels in over a month
Bitcoin’s gains today and recently align with a depressive trend witnessed on the US dollar Index (DXY) chart.
Notably, DXY—a metric that tracks the dollar's strength versus a basket of top foreign currencies—dropped 0.90% in a week to reach around 104 on July 12, its lowest level in about five weeks. This decline followed bond traders' rising bets on an interest rate cut in September.
DXY faced further downside pressure against the prospects of a mounting US government deficit; it reached $1.27 trillion year-to-date until June.
Lower interest rates and a higher deficit can weaken the dollar because they raise the potential for increased borrowing and concerns about the government's financial health, which can dilute the value of the currency.
A cheaper currency typically prompts investors to seek returns in riskier assets, including stocks and cryptocurrencies.
Related: Bitcoin price will hit $330K this bull cycle — Analyst
That explains Bitcoin's renewed strength despite mounting concerns related to the German government's BTC dump, as well as the ongoing reimbursement of over 140,000 BTC to Mt. Gox clients.
BTC price technical bounce?
From a technical perspective, Bitcoin's ongoing price rebound appears to be part of an oversold bounce. This is evidenced by its four-hour relative strength index (RSI), which recently dipped below the oversold threshold of 30—a level that often signals an impending recovery.
Today’s gains stem from the buying sentiment near the lower trendline of Bitcoin's prevailing triangle-shaped consolidation pattern, as shown in the chart above. As a result, BTC’s immediate upside target is around $59,000, coinciding with its descending trendline resistance.
A clear break above $59,000 will put the 200-4H exponential moving average (200-4H EMA; the blue wave) in sight at around $61,235 in July, up by 4.65% from the current price levels.
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