Bitcoin Quiets Down in July After a Tumultuous First Half of 2023

• Bitcoin is trading unusually flat for July.
• 74% of Bitcoin addresses are in profit.
• Wednesday CPI data is the next data point that markets will be watching.
• The CoinDesk Bitcoin Trend Indicator continues to signal “significant uptrend.”

Bitcoin is trading unusually flat for July, a sign that investors are reluctant to chase the 21% price increase of the past month. Wednesday’s Consumer Price Index (CPI), the first, significant inflation data since mid June, may establish whether the range-bound trading pattern continues. A continued decline could buoy investors, while a flattening or increase could stifle them.

This year has been strong for bitcoin, with prices up 84% year to date. However, month-to-month data shows that much of the gains occurred during the winter, with January and March registering average daily returns of 1.11% and 0.73% respectively.

June performance was strong as well, with its 0.41% average daily gain largely driven by BlackRock’s spot ETF announcement. February and April were relatively flat, while May has been BTC’s only negative performing month this year.

Historically, July has been strong for bitcoin. Since 2014, BTC has risen an average 0.39% in July, third highest among all months. When measuring from 2020, July finishes second (to October), with a 0.57% average daily gain. Extrapolated over 30 trading days, the performance amounts to approximate monthly gains of 12% and 19%, respectively.

This has not been the case for 2023 however, as the average daily gain in July has been just 0.03%, approximately 0.93% higher if calculated over 30 days.

While bitcoin’s price has trended higher throughout 2023, the trajectory of daily gains by month has moved in the opposite direction. For all of the excitement around BTC’s rise, it's still a beginning-of-the-year phenomenon.

Pessimistic investors would likely consider the trend concerning for BTC prices. Optimistic ones would likely anchor to the fact that bitcoin has maintained its early year increase.

On-chain data from Glassnode indicates that 74% of bitcoin addresses are in profit, which likely scores one for the bulls. A high percentage of BTC holders in profit implies an investor base likely to hold its current position, especially following the sharp 2023 run-up.

A potential headwind exists in Wednesday’s CPI release, the first key inflationary data since the middle of June. Forecasts indicate that month-over-month prices increased 0.3%. A larger increase could potentially weigh on prices. Still, with markets already expecting the Federal Open Market Committee (FOMC) to raise interest rates in July, it would likely take a huge increase to move prices significantly.

Finally, the CoinDesk Indices Bitcoin Trend Indicator continues to signal that BTC is in a significant uptrend, a sign that short-term prices are moving higher than long-term averages.

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