Bitvavo Market News - Bitcoin bounces back after an eventful week

This week has been turbulent for the crypto market. Initially, the market seemed at an impasse, mired in uncertainty due to two pressing questions: Are the worst shocks over? Or is the price set to drop further, with the bottom yet to be reached? 

Market update

The price drop to €49,400 has altered the market structure. We are no longer seeing a "correction by time," where the market stabilizes while the price stays within a narrow band for an extended period. Instead, we are now seeing a "correction by price," where an ever-decreasing price challenges investors' beliefs.

Much of last week was dominated by worry and doubt. The German government sold 50,000 bitcoins, compounding the struggles of miners and Mt. Gox distributions. The price remained trapped below the 200-day average and the lower end of the price range, where it had been moving sideways for four months. This zone is indicated with (1) in the chart below.

This weekend, the stock price broke through. The rise began a few minutes after it was announced that former President Trump had survived an assassination attempt. As the price climbed, liquidations of short positions added further momentum. Investors who had bet on further declines were forced to close their positions by buying bitcoin due to the price rise.

The next key price zone on the way up sits around €59,500. This level would mark a higher peak than the high on July 1st. It also aligns with the 40 and 50 day averages, as well as the average buy price of recent investors. This is marked as (2) on the chart.

During a tumultuous decline like the one around July 5th, many investors adopt a wait-and-see approach. They may wish to buy, but choose to delay their purchase for a while. Why buy today when everything could be cheaper tomorrow?

If the price starts to rise again, this deferred demand can still be activated. This acts as a tailwind for any crypto currency, but in particular for ether it seems. ETF analysts expect spot ether ETFs to be approved this week, potentially leading to the commencement of trading in the near future.

The ether chart below looks encouraging. The early July bottom is only slightly lower than previous lows in this correction. A rise above €3,200 takes the price above the 40-day average and the descending trend line. From there, a rise to the upper end of this price range seems likely.

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Solana growing despite headwinds

Just before the weekend, analysis firm Messari published an extensive report on Solana's second quarter. Here are our key takeaways.

According to Messari, one of the most notable developments was the emergence of Pump.fun. This platform enables speculators to easily launch their own Solana token. This happened frequently with the platform bringing in as much as $48 million in fees. This activity has hit trading platform Raydium among others, with a 77% increase in daily trading volume.

Dialect and the Solana Foundation introduced Solana Actions and Blockchain Links (Blinks), which allow users to view and execute transactions from within digital environments such as X. This makes interacting with blockchain applications easier and more accessible, which Messari analysts say is crucial for wider adoption.

Although Solana is primarily the domain of consumers, Messari said Solana had also made significant strides at an institutional level. PayPal released its stablecoin PYUSD on Solana using token extensions to add extra functionality to the digital dollars. Stripe also announced that it will support payments on the Solana network.

Messari also mentioned the setbacks Solana faced during the second quarter. The network experienced outages and delays due to spam transactions. An update to the communications protocol, stake-weighted Quality of Service (QoS), brought relief and introduced a new structural demand for SOL. In addition, new solutions were implemented to enhance Solana's capacity, reducing the reliance on second-tier solutions.

Tokenization is trending

Tokenization involves converting existing assets onto a blockchain. These tokens can represent various traditional financial products, such as government bonds, or physical assets such as real estate or paintings. Real-world assets (RWA) are a prime example of this concept. This domain is particularly compelling for financial institutions as they can release new financial products on a modern and efficient infrastructure.

This topic intermittently gains traction, with traditional financial institutions progressing in similar fits and starts. This week, Goldman Sachs brought more attention by announcing its plans to launch three more initiatives in this field by the end of this year. The specifics remain undisclosed, but they include the launch of a marketplace for tokens such as this.

MakerDAO has also unveiled the "RWA race," dubbed the Spark Tokenization Grand Prix. The organization aims to convert $1 billion of its stablecoin reserve into tokens representing U.S. government bonds as soon as possible. BlackRock, Ondo, and Securitize have already announced their participation in the initiative.

In other news

• Could this be the week when spot ether ETFs finally launch? Stock market commentator and ETF specialist Nate Geraci thinks so. "Don’t know anything specific, just can’t come up with a good reason for any further delay at this point." he writes. Since early last week, all updated applications have been submitted to the regulator.

• "New all-time high" writes climate activist Daniel Batten at X. According to Batten, 56.2% of the power used by the Bitcoin network comes from renewable sources. Batten has shared the methodology and data supporting this calculation. Previously on X, Batten reported that traditional media have been predominantly positive in their coverage of bitcoin mining since 2024.

• U.S. bitcoin funds see a series of six consecutive days in the green. In total, nearly $1.2 billion flowed into the funds. On Friday, investors added nearly $120 million to both BlackRock (IBIT) and Fidelity (FBTC) funds. This performance has been highlighted in the media because it goes against the prevailing market sentiment. So far, ETF investors are proving steadfast.

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