Home Cryptocurrency What Bitcoin’s ‘Neutral’ Approach at the End of July Means for BTC in August

What Bitcoin’s ‘Neutral’ Approach at the End of July Means for BTC in August

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What Bitcoin’s ‘Neutral’ Approach at the End of July Means for BTC in August

Bitcoin, the world’s largest cryptocurrency, saw a sharp sell-off between June and July 2022. Understandably, this caused its price to plummet. In fact, the price of BTC fell below the $20,000 mark, with many holders pulling out of the network for fear of mounting losses.

However, the new month could see a fresh start for cryptocurrencies. So, what exactly will happen to Bitcoin in August?


Bitcoin did rebound strongly in the second half of July, despite the notable correction. At press time, BTC was trading above the $23,700 mark, up 0.5% in 24 hours. In fact, the average number of BTC in circulation in July closed neutral after breaking a 4-month price downtrend.

On-chain analytics platform Santiment uses its NVT model to highlight this situation in the diagram below –

Source: Santiment

(NVT stands for Network Value to Transaction Ratio. Use it to see if a blockchain network is undervalued. When it is undervalued, it signals bullish price. When it is overvalued, it signals bearish.)

Here, BTC gains +18% in July after NVT model growth bullish The May and June divergence finally saw prices rebound. Santiment added,

“With prices rising and token circulation falling slightly, there are now neutral signals that August can go in either direction.”

On the other hand, despite this “neutral” conclusion, holders do maintain an uncompromising attitude towards the flagship coin. For example, the number of addresses holding Bitcoin highlights an unbiased relationship.

Source: Glassnode

Do we (break even)?

Short-term holders, known as “weak hands,” exhibit a somewhat bearish picture. As one analyst pointed out in a CryptoQuant post (@Goducifa), If their SOPR spikes, selling pressure from short-term holders could increase. (SOPR = cost output profit rate)

This is exactly the case here.

Source: CryptoQuant

As the chart above shows, the aforementioned metrics have risen significantly in recent days. A few months ago, Bitcoin’s STH SOPR fell below “1,” indicating that these holders sold at a loss.

However, now that SOPR is near the “SOPR = 1” line that represents the “breakeven point,” one can expect more selling pressure. With the metric reaching this level, investors facing losses “believed they had their money back now” and therefore “sold their tokens here”.

This will lead to higher than usual selling pressure on STH at this mark. By extension, it provides resistance to the price of Bitcoin. Unless long-term holders balance the move, BTC could see some downtrend in August this time around.

Regardless, some enthusiasts still believe that BTC is far from a new bull cycle. For example, prominent crypto analyst TAnalyst recently tweeted,

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