Bitcoin starts off strong in July, analysts optimistically predict $40,000 is “inevitable”

Data from Bitpush Terminal showed that the price of Bitcoin broke through $31,000 during the U.S. stock trading session on Monday, triggering bullish sentiment among investors and analysts.

Over the past week, speculation about the application for a spot Bitcoin ETF and whether it would be approved by the U.S. Securities and Exchange Commission ( SEC ) has dominated market headlines. Although the Wall Street Journal reported last Friday that the SEC informed that several ETF filings were incomplete, causing Bitcoin to plunge instantly, the Chicago Board Options Exchange (Cboe) quickly resubmitted the form that evening, and Nasdaq also updated the application form on behalf of BlackRock on Monday. They both designated Coinbase as a partner to oversee the sharing agreement.

Institutional investors are continuing to pour money into crypto products, with inflows worth $125 million over the past week, with much of the money concentrated in bitcoin-related funds, investment firm CoinShares said on Monday.

Is a further rebound to $40,000 "inevitable"?

Some analysts believe that Bitcoin could soon reach the $40,000 mark considering the current market sentiment.

Fairlead Strategies founder and managing partner Katie Stockton predicted on CNBC’s “Squawk Box” that bitcoin could rise to $36,000 from its current trading price and then reach $40,000.

Ambire Wallet CEO Ivo Georgiev told The Block that despite concerns about further headline risk, the run toward $40,000 should be “easily attainable.”

Meanwhile, Nexo co-founder Antoni Trenchev believes that $32,000 is the next resistance level, after which Bitcoin could surge further. He noted that July is usually a good month for digital assets. He tweeted: “It’s easy to forget that Bitcoin has been getting hammered since the FTX debacle, but in early July we saw it rise by more than 80%.”

Trenchev contrasted Bitcoin’s performance with that of most of the altcoin market, which he believes remains at risk of being regulated as securities, an issue that will persist until at least the end of the year.

He said: “Bitcoin has surpassed its April highs, while the altcoin market is 20% below April levels and 70% below its 2021 highs. Bitcoin does not have to worry about issues such as regulation, and its resilience and influence at the beginning of a new month and quarter set it apart.”

Antoni Trenchev added: “If the SEC doesn’t get around to approving one of the spot Bitcoin ETFs, this will undoubtedly have a significant impact on the crypto market.”

Crypto technical analyst Michael Nauss noted that BTC/USD closed above the adjusted volume-weighted average price (AVWAP) for the first time on a monthly basis since its 2021 all-time high .

AVWAP examines important support and resistance levels based on trader behavior, with a June close above $30,000 marking a recovery not seen in two years.

Caleb Franzen, CEO of Cubic Analytics , retweeted Nauss's tweet, calling on market observers to extend their time preference. He pointed out, "When the BlackRock ETF application was announced, the price of Bitcoin was about $26,000 and rose to a year-to-date high of more than $31,000. The current trading price is still above $30,000. Are people losing their minds? No, I predict higher highs and higher lows."

Bitcoin’s resilience against macro headwinds

Uncertain macroeconomic and inflation conditions, coupled with a seemingly hawkish Federal Reserve, could create short-term headwinds.

Inflation-adjusted U.S. government bond yields are rising, causing some observers to worry about potential risk aversion in stocks and broader financial markets. Crypto analysts, however, expect Bitcoin and digital assets in general to remain resilient.

According to data tracked by TradingView, the real yield on 5-year Treasury bonds rose to nearly 2% last week, breaking through the September 2022 high of 1.92%, the highest level since the end of 2008. The 10-year Treasury yield is 1.6%, which is very close to the data in 2009. At the same time, the real yield on two-year Treasury bonds has reached 3%, the highest level in at least a decade.

Rising Treasury yields could curb economic growth and reduce the appeal of investing in riskier assets such as bitcoin and gold. Bitcoin and Wall Street's tech-heavy Nasdaq index have historically moved in the opposite direction of Treasury yields.

Richard Usher, head of over-the-counter trading at crypto bank BCB Group , believes the recent surge in U.S. Treasury yields is a problem for stocks, not digital assets.

Most macro traders who are sensitive to changes in Treasury yields left the cryptocurrency market during last year's plunge, leaving "long-term holders" in control of the market. Usher wrote in his article: "Treasury yields are now a real alternative to equity risk markets. The question to ask is what type of investor this return is attractive to, the typical investor in cryptocurrency or technology stocks is looking for higher potential returns, or is investing in the growth of the industry or asset class for the long term. Therefore, I think rising Treasury yields are more of a headache for blue chips than markets such as technology or cryptocurrency, and will not disrupt the medium-term growth narrative."

Ben Lilly, a cryptoeconomic researcher at Jarvis Labs, told Coindesk that in the long run, the increasing costs may actually bring more capital to productive sectors such as blockchain. Lilly said: "This just shows the normal trend of capital costs. When traditional markets become bumpy, many people tend to look to the crypto industry as a way to increase productivity. I expect this will bring more funds to innovative areas such as smart contracts, programmable currencies and DeFi, which are expected to increase productivity."