Bitcoin held near $63,500 on Tuesday, preserving most of a six-day rebound after a harsh June selloff, as traders weighed whether the recovery marked the start of a durable turn or merely a short-covering bounce in thin summer markets.
The move followed Bitcoin’s drop of 20.5% last month to $57,803, its weakest June performance since 2022. The rebound brought the token back above the closely watched $60,000 level, easing immediate fears of a deeper breakdown but leaving the market short of a clear confirmation that demand has returned in force.
A key point drawing attention from analysts is that more than half of Bitcoin’s circulating supply was recently held at a loss. Historically, that condition has appeared near periods of market stress and, in several past cycles, was followed by strong one-year returns. But analysts also cautioned that the signal is not flawless and that current market structure, ETF flows, macroeconomic expectations and exchange activity all need to be considered.
Wintermute described the latest rise as a relief rally rather than evidence of a major structural shift. The trading firm said softer U.S. jobs data, calmer geopolitical conditions in the Middle East and slightly easier expectations for Federal Reserve policy helped risk assets recover after a painful June. Bitcoin’s bounce came alongside gains in equities, but the cryptocurrency outperformed major stock indexes over the same stretch.
Ether also rallied sharply, rising 13.5% during the week, while Bitcoin gained 6.75%. That compared with a 2.2% rise in the S&P 500 and a 0.9% gain in the Nasdaq. The recovery suggested traders were willing to re-enter higher-beta assets after macro pressure eased, though the size and speed of the move also reflected the reduced liquidity that often defines summer trading conditions.
The weaker jobs data played a central role in improving sentiment. U.S. payrolls rose by 57,000, well below the consensus forecast of 110,000, according to figures cited by Wintermute. The report reduced the implied probability of another Federal Reserve rate hike before year-end to roughly 25%, helping lift expectations that financial conditions may not tighten further in the near term.
Relief rally or real turn?
The central question for the market is whether Bitcoin’s recovery from below $58,000 was a failed breakdown or simply a temporary bounce before another test of support.
Bitfinex analysts leaned toward the failed-breakdown interpretation, noting that Bitcoin moved quickly back above $60,000 within four sessions. In technical market terms, a sharp move below a major support level followed by a rapid recovery can suggest that sellers failed to gain control. Such patterns can trigger repositioning, particularly when traders who had bet on further downside are forced to cover.
Still, Bitfinex said the market needs renewed spot Bitcoin ETF inflows, especially into IBIT, to confirm a broader improvement in demand. Without consistent ETF buying, the rally may remain vulnerable to renewed selling pressure from short-term holders and traders using the move to reduce exposure.
Exchange-traded fund data showed tentative improvement in early July after a difficult stretch. Spot Bitcoin ETFs recorded a $221.7 million single-day inflow on July 2, ending a 10-day redemption streak totaling $2.73 billion. U.S.-listed Bitcoin ETFs then added a net $266 million on July 6, while spot Ether funds received $20.7 million. ETHA accounted for $23.3 million of those Ether inflows.
The shift was significant because ETF flows have become one of the market’s most visible demand indicators. Strong inflows earlier in the cycle helped support Bitcoin’s rally to record highs, while recent outflows contributed to pressure during the June decline. For many traders, persistent ETF inflows would provide stronger confirmation than price action alone.
Why the loss signal matters
On-chain data has added another layer to the debate. According to K33, there have been four previous instances since 2011 when more than half of Bitcoin’s supply was held at a loss. The following one-year returns were 359%, 69% and 93% in three cases, while one period produced a 25% decline.
That record shows why the signal is attracting attention, but it also shows why caution is necessary. The condition has often appeared near important market lows, yet it has not guaranteed immediate gains or a clean recovery. K33 said the cycle low in those previous cases arrived within 10 to 101 days after the crossover, suggesting that even if the signal proves constructive, the market may still face a choppy period before a durable bottom is confirmed.
K33 also noted that Bitcoin’s price was around 4.3% below its 200-week moving average on June 5. That long-term trend measure has previously aligned with major market troughs in 2015, 2018 and 2020. The 200-week moving average is often viewed as one of Bitcoin’s most important durable support gauges because it smooths out extreme volatility and captures the broader cycle trend.
Large holders appeared to respond to that area. More than 270,000 BTC was accumulated near the 200-week moving average, according to market data cited in the report. That buying helped absorb supply and may have contributed to the speed of the rebound above $60,000.
However, K33 said the recent downturn was driven more by newer holders selling at losses than by long-term wallets taking profit. That distinction matters. Selling by newer entrants can create sharp downside pressure during stress, but long-term holders are generally seen as a more stable group. If older wallets remain reluctant to sell, circulating supply may tighten quickly once new demand returns.
Options traders position for recovery
Derivatives activity also reflected a change in tone. Option flows shifted toward call options with strike prices between $60,000 and $70,000, suggesting traders were positioning for further upside or hedging against a sharp rebound. Calls give buyers the right to purchase the asset at a set price, and rising interest in upside strikes can point to improving sentiment.
That does not mean the market has turned decisively bullish. Options positioning can also reflect hedging by desks managing broader exposure, not only directional bets. Still, the move toward calls after a steep drawdown shows that traders were no longer focused exclusively on downside protection.
Ether’s rally added to the impression that risk appetite had improved across digital assets. The second-largest cryptocurrency rose faster than Bitcoin during the week, supported partly by positioning around the July 1 launch of an institutional product. The launch followed workforce and budget reductions and arrived after net weekly ETF outflows of about $345 million, making the rebound notable in a market that had recently faced heavy pressure.
Ether’s ability to outperform Bitcoin often signals a willingness among traders to move further out on the risk curve. But the durability of Ether’s move remains tied to ETF demand, network activity and broader appetite for digital assets.
Macro backdrop turns less hostile
The rebound in Bitcoin also coincided with a broader rise in risk assets. Kyle Rodda at Capital.com linked the improved market tone to a rotation on Wall Street, where technology and cyclical sectors helped lift indexes. Softer inflation signals from ISM services data added to the view that the Federal Reserve may have less reason to tighten policy further.
Rate expectations remain central to crypto pricing. Bitcoin and Ether do not generate cash flows, so their appeal can rise when traders expect lower real yields or easier liquidity conditions. Conversely, tighter policy and higher yields tend to reduce appetite for speculative assets.
Futures pricing now suggests a high probability that rates remain steady at the July meeting, with a much smaller chance of a hike. Separate pricing cited in the market also points to roughly a one-in-four chance of additional policy action before year-end. Those expectations helped stabilize sentiment, but the outlook remains sensitive to inflation data, labor reports and Federal Reserve commentary.
Geopolitical conditions also played a role. Wintermute said calmer developments in the Middle East helped reduce risk aversion. Crypto markets have become increasingly sensitive to global risk events, especially during periods when liquidity is thin and positioning is crowded.
U.S. demand remains a concern
Despite the rebound, one indicator continued to flash caution. CoinGlass data showed that the Coinbase Bitcoin Premium Index remained negative for a 50th consecutive day since May 19, its longest negative streak since the measure was created. The index stood at minus 0.0742%.
The Coinbase premium compares Bitcoin pricing on Coinbase with other venues and is often used as a gauge of U.S. spot demand. A positive premium can suggest stronger buying from U.S.-based institutions and traders, while a negative reading can point to weaker demand or temporary selling pressure.
The persistence of the negative reading complicates the bullish case. If U.S. spot demand remains subdued, Bitcoin may struggle to sustain gains without stronger ETF inflows or renewed buying from large holders. The market can still rise in such conditions, especially if derivatives positioning and offshore demand improve, but the absence of a positive Coinbase premium makes the recovery less convincing.
Exchange activity also points to the possibility of near-term volatility. CryptoQuant reported rising deposits of Bitcoin and alternative tokens into exchanges. Higher exchange deposits can sometimes indicate that holders are preparing to sell, though the signal is not always direct. Tokens may also move to exchanges for collateral, derivatives trading or operational reasons.
Still, after a sharp rebound, increased exchange deposits can heighten the risk of volatility. Traders may use the recovery to exit positions, rebalance portfolios or reduce leverage. If selling pressure meets weak liquidity, price swings can become exaggerated.
Forecasts remain divided
Bernstein maintained its year-end Bitcoin projection of $150,000 despite a 54% decline from the cycle peak. The forecast reflects a view that the longer-term cycle remains intact and that ETF adoption, supply constraints and institutional participation can support a renewed advance.
That target stands in contrast to the more cautious tone from some trading desks, which argue that the latest rebound has not yet shown the breadth or flow confirmation needed to declare a lasting trend change. The sharp June decline damaged momentum, and Bitcoin must still prove that it can hold above key levels while ETF inflows stabilize.
For now, the $60,000 area has regained importance as a psychological and technical floor. A sustained hold above that level would help support the failed-breakdown argument. A drop back below it, especially with renewed ETF outflows or a deeper negative Coinbase premium, would revive concerns that June’s weakness has not fully run its course.
The next major test may come from incoming U.S. economic data and ETF flow reports. Softer inflation and labor numbers could reinforce expectations that the Federal Reserve is finished tightening, which would likely support risk assets. Stronger data, by contrast, could push yields higher and pressure Bitcoin again.
Bitcoin’s latest recovery has improved short-term sentiment, but the evidence remains mixed. Historical on-chain signals suggest the market may be closer to a cyclical opportunity than it was a month ago. ETF flows have started to improve, large holders have accumulated near long-term support, and options traders are looking again at upside strikes.
At the same time, liquidity remains thin, U.S. spot demand is not clearly strong, exchange deposits are rising and the rally followed a severe June decline rather than a period of steady accumulation. The market has moved away from panic, but it has not yet delivered full confirmation of a new uptrend.
For traders, that leaves Bitcoin in a familiar position: technically stronger than it looked below $58,000, but still dependent on fresh demand, macro stability and ETF inflows to turn a relief rally into a more durable recovery.
Unsure whether this rebound has legs? Deepen your strategy with our guide on Bitcoin trading strategies for volatile markets.
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