Bitcoin (BTC) managed to secure modest gains, while Ethereum (ETH) faced a downturn. As August begins, several factors will play a crucial role in determining the future trajectory of these major cryptocurrencies.

July’s Market Trends

In July, Bitcoin posted a modest return of 2.95%, showing a slight increase despite some pullback towards the end of the month. This performance contrasts with Ethereum, which suffered a decline of 5.88% during the same period. Despite the overall volatility, Bitcoin’s gains set the stage for potential new yearly highs.

The Federal Reserve’s decision to hold the benchmark interest rate at 5.25%-5.50% for the eighth consecutive time had a noticeable impact on the market. This decision, announced during the Federal Open Market Committee (FOMC) meeting, was in line with market expectations. However, Chair Jerome Powell hinted at a possible rate cut in September, depending on economic growth figures. Such a move could potentially boost market liquidity, which would generally be favorable for cryptocurrencies.

Impact on Bitcoin

Bitcoin’s performance in July was characterized by its resistance to broader market declines. The cryptocurrency traded within a range between $58,000 and $70,000 for most of the month. Despite a modest gain, Bitcoin faced resistance at the $69,600 level, a key hurdle that has repeatedly stymied attempts to push above $70,000.

Bullish traders are eyeing the potential to flip the $69,600 resistance to advance towards $72,000, which is seen as the next significant barrier. Overcoming this resistance could pave the way for Bitcoin to challenge its March all-time high. However, the resistance at $69,600 has proven tough to breach, suggesting that Bitcoin will need a strong catalyst to push beyond this level.

Ethereum’s Struggles

In contrast, Ethereum struggled in July, posting a loss of nearly 6%. Despite some positive developments, such as the launch of US-based spot Ether ETFs, ETH’s performance fell short of expectations. The ETH/BTC ratio decreased by 10.72% over the month, reflecting Ethereum’s relative weakness compared to Bitcoin.

Large-cap altcoins like MANTRA (OM) and Helium (HNT) were standout performers in July, achieving returns of 44% and 36%, respectively. However, other projects such as Fantom (FTM), Flare (FLR), and Starknet (STRK) experienced significant losses of over 30%.

Expectations for August

Looking ahead to August, several factors could influence the performance of Bitcoin and Ethereum. Notably, Bitcoin saw an increase in accumulation by addresses holding at least 0.1% of BTC’s circulating supply. This surge in accumulation, the highest since October 2014, suggests that strategic investors are positioning themselves for a potential breakout.

Additionally, data from Into The Block revealed a 35% increase in daily new Bitcoin addresses on July 30, signaling growing interest and participation in the market. Increased capital inflows into the crypto market further support a bullish sentiment. The total market capitalization of stable coins grew by 2.11% in July to $164 billion, its highest level since April 2022. This increase in stable coin market cap could provide additional liquidity to the crypto market, potentially benefiting both Bitcoin and Ethereum.

Technical Outlook

For Bitcoin, the technical outlook remains focused on overcoming the resistance at $69,600. A successful breach of this level could open the path to test the $72,000 mark. Conversely, if Bitcoin fails to break through this resistance, it might continue to trade within its current range.

Ethereum, on the other hand, faces challenges as it looks to recover from its July losses. The launch of spot Ether ETFs was a positive development, but it did not prevent the cryptocurrency from underperforming. For Ethereum to regain momentum, it will need to address the technical and market challenges that have plagued it recently.

Conclusion

In summary, July was a month of mixed results for Bitcoin and Ethereum, with Bitcoin achieving modest gains and Ethereum experiencing declines. As August unfolds, key factors such as potential Federal Reserve rate cuts, increased market liquidity, and technical resistance levels will influence their performance.