When Will Bitcoin Rise Again? Five Factors That Could Signal the Next Rally

Bitcoin is attempting to recover after a significant decline. Its price has returned above the $64,000 mark, though a genuine trend reversal has not yet been confirmed. When will bitcoin start growing again? The decisive factor will likely not be a single piece of news or an exact date, but rather the convergence of several market signals.

At the time of writing, bitcoin is trading at approximately $64,100 according to CoinMarketCap data. Compared to July's drop below $60,000, this represents a visible recovery. However, a return to higher prices alone does not necessarily signal the beginning of a new bitcoin rally.

The current situation more closely resembles a period in which the market is attempting to form a more solid bottom. Analytics firm Glassnode described in its July analysis that investor positioning has improved, institutional capital is gradually returning, and traders betting on further declines have begun closing their positions. At the same time, bitcoin continues to encounter significant resistance zones, and its growth is not yet supported by sufficiently broad spot demand.

The answer to when bitcoin will start growing again cannot therefore be narrowed down to a specific day. Investors should primarily watch the following five signals.

1. New capital begins flowing steadily into bitcoin ETFs

One of the most powerful engines of market activity could be continued inflows into spot bitcoin ETFs. These allow investors to gain price exposure to bitcoin through traditional exchanges without having to purchase and store the cryptocurrency themselves, and this product is subject to a different regulatory regime than the direct custody of crypto assets.

The retreat of institutional demand was among the main reasons why bitcoin was unable to sustain higher prices in previous months. Glassnode, in its analysis from early July, warned that institutional outflows and defensive positioning in the options market were pushing sentiment lower. At the same time, patient buyers were beginning to emerge, gradually absorbing supply during the decline.

Several weeks later, the situation began to improve. According to more recent Glassnode analysis, institutional investors are gradually returning to the market. However, a few days of positive flows may not be enough. To confirm a longer-term reversal, bitcoin would need several weeks of sustained demand.

If bitcoin funds were to regularly receive new capital even as the cryptocurrency's price rises, it would create structural buying pressure in the market. This could gradually absorb coins being offered by investors looking to take profits at higher prices.

The first important signal will therefore not be merely a one-time return of ETFs to positive territory, but their ability to maintain a positive balance over an extended period.

2. The US Federal Reserve signals an easing of monetary policy

Although bitcoin is often referred to as digital gold, over shorter time horizons it still behaves as a risk asset sensitive to the amount of liquidity in the financial system.

Higher interest rates offer investors more attractive returns from relatively safe bonds and other conservative assets. They also increase the cost of financing and reduce the willingness to bet on cryptocurrencies, technology stocks, and other volatile investments.

The US Federal Reserve left its benchmark interest rate in the range of 3.50 to 3.75 percent at its June meeting, as stated in the official Federal Reserve announcement. The Fed also highlighted elevated economic uncertainty and ongoing risks related to price stability.

For bitcoin, the most important factor may not be an immediate rate cut in itself. Financial markets often move in anticipation, meaning that a significant reaction can be triggered by a shift in the central bank's rhetoric and a clearer signal that monetary easing is approaching.

A positive scenario for bitcoin would be a combination of slowing inflation, falling US Treasury yields, and a weaker dollar. Such an environment typically increases investors' willingness to take on risk.

Conversely, further rises in inflation, more expensive energy, or expectations of a stricter Fed policy could delay the onset of a bitcoin rally.

3. Bitcoin breaks through key resistance and holds above it

Another signal of a new rally beginning will be a convincing break above an important technical resistance level. It is not sufficient for bitcoin to merely reach above the monitored price level for a few hours. It must hold above it and ideally convert it into support during subsequent pullbacks.

In recent months, bitcoin has repeatedly moved within a wide range in which new sellers appeared with every significant upward move. Some of these are investors who bought at higher prices and are using the market's recovery to close their positions without a loss or with a smaller loss.

To confirm a trend change, it will therefore be important for bitcoin to form a series of higher lows and higher highs. Investors should also monitor trading volumes. A breakout accompanied by strong volume generally carries more weight than a brief price spike during a period of low liquidity.

If bitcoin holds above key resistance, it may attract additional buyers while simultaneously forcing traders betting on a decline to close their positions. Otherwise, there is a risk of returning to the previous trading range.

4. A broader segment of the market joins the major investors

Another positive signal is the gradual accumulation of bitcoin by long-term holders. Glassnode noted at the beginning of July that experienced investors had begun buying again during the decline, absorbing coins being offered by more nervous market participants.

According to the Accumulation Beneath the Surface analysis, after bitcoin's drop below $60,000, it entered a phase in which long-term holders and patient buyers were gradually absorbing supply. The firm described this as a possible beginning of the process of forming a price bottom, though not as its definitive completion.

Activity from large wallets can be positive, but for a strong rally, buying interest will need to spread to smaller investors as well. Growth driven solely by a few large players tends to be more vulnerable than a move in which a larger portion of the market is involved.

Investors should therefore monitor not only the amount of bitcoin held by so-called whales, but also the activity of smaller wallets, spot volumes, and the quantity of coins being sent to cryptocurrency exchanges.

A decline in bitcoin inflows to exchanges is generally a positive signal. It may suggest that investors are not preparing their coins for immediate sale. However, the withdrawal of bitcoin from exchanges alone does not guarantee a price increase. It must also be accompanied by new and sufficiently strong demand.

5. Real buyers take over the rally, not leveraged speculators

The current recovery is partly supported by the closing of short positions. Traders who had been expecting further declines are forced, following the price increase, to buy bitcoin back in order to limit their losses.

A so-called short squeeze can push prices up quickly, but its strength is usually limited. Once the largest short positions are closed, the market needs another source of demand. If regular spot purchases do not materialise, the rally may stall quickly.

Glassnode also highlights this issue, noting that spot market participation remains weak and the current move still lacks broader investor conviction. Institutions are returning, but on-chain activity remains subdued and options traders remain cautious.

For more stable price growth, higher trading volumes on spot exchanges are required, not merely a sharp increase in futures positions. A healthier signal would be gradual growth without extreme use of financial leverage.

Conversely, a rapidly rising number of open derivative positions and excessively optimistic funding of long trades may serve as a warning. Such a market is vulnerable to sharp liquidations, in which forced selling can erase a significant portion of previous gains within a matter of hours.

Has a new bitcoin rally already begun?

Some early signs of a reversal are already visible in the market. Long-term investors have absorbed part of the supply, institutional interest is gradually returning, and selling pressure has eased. Bitcoin has also managed to rise even in an environment of unfavourable news, which may suggest that the number of investors willing to sell at current prices is declining.

Nevertheless, it remains premature to label the current recovery as a confirmed bitcoin rally. A stronger confirmation would require the simultaneous occurrence of several events: a stable inflow of capital into bitcoin ETFs, a more favourable policy stance from the US Federal Reserve, a break through key price resistance levels, a broadening of purchases across more investor groups, and growing spot demand without excessive use of financial leverage.

Bitcoin may therefore continue to rise over the coming weeks. Equally, it may continue to move sideways for several more months or retest lower price levels. Investors should not attempt to pinpoint the exact moment of a reversal based on a single indicator. A more reliable approach is to monitor whether individual positive signals are beginning to confirm one another.

The content of this article is for informational purposes only and does not constitute investment advice or a recommendation to purchase any specific asset. Investments in crypto assets carry a high level of risk. The value of cryptocurrency assets may fall as well as rise, and you may lose your entire invested amount. Crypto assets are not protected by deposit guarantee schemes. Past returns are not a guarantee of future results.