The crypto market is in a “summer slump” phase, with Bitcoin facing a key test at $68k

July 22, report: After rebounding about 15% from its early-July low, Bitcoin finally broke through $66,600 on Tuesday this week, reaching a new high in more than a month.

At present, Bitcoin’s price is pressing toward the key resistance level at $68,000, which may indicate a crucial test of whether it can make a directional move.

According to Glassnode on-chain data, $68,000 could become the key resistance that determines whether the rebound can continue, because at this level the price has been close to investors’ average cost basis over the past five months.

If BTC approaches or breaks this level, investors who were previously in a losing position are likely to choose to sell and exit after getting back to breakeven, which could create a clear sell-pressure at this point.

In addition, $68,000 was also the rebound high in mid-June; after the price failed to push higher, it then dropped sharply, eventually hitting a temporary low of $58,000.

Despite the heavy resistance, there are signs that market conditions have begun to improve. U.S. spot Bitcoin ETFs have shifted from two straight months of net outflows to slight net inflows this month, but ETF flows and the purchase volumes by companies such as Strategy are still far below levels seen earlier this year.

Meanwhile, Bitcoin’s share of spot crypto trading volume is currently close to 67%, higher than about 50% a year ago, suggesting investors still prefer BTC over small-cap tokens. This indicates traders are still leaning toward defensive strategies rather than taking on risk across the board.

Separately, observation data provided by K33 Research’s research director shows that, given continued declines in institutional participation, CME Bitcoin futures open interest has fallen to the lowest level since 2023.

And in the spot market, Bitcoin’s 30-day trading volume is only 62% of the annual average, and the late-July period is historically one of the weakest times of the year.

Therefore, K33 Research describes the current crypto market as “a hopeful and typical summer slump” period.

To sum up: although ETF flows have started to stabilize this month after heavy redemptions in May and June, this suggests that sell pressure has eased somewhat;

however, the current market is not accompanied by a strong return of buy-side demand, which may indicate that overall market activity remains in a downturn.

#CryptoMarket