Bitcoin’s July rally has traders watching for a 2022-style reversal

Bitcoin has climbed close to 10% in July, giving crypto investors a stronger month after a weak stretch. The catch: several traders say the rebound looks similar to Bitcoin’s 2022 bear-market rally, when a sharp July bounce was followed by renewed losses.

CoinGlass data cited by market participants showed BTC/USD up 9.5% for the month as of Saturday, putting Bitcoin on track for its strongest July performance in four years. Bitcoin was trading near $64,198 in the market data shown alongside the report.

A bear market means a longer period when prices are broadly falling or struggling to recover. In that kind of market, short rallies can happen without changing the bigger trend, which is why traders are watching whether July’s gain leads to follow-through or fades into August.

Why traders are comparing this rally with 2022

CoinGlass data shows Bitcoin ended July 2022 up nearly 17% after dropping 38% in June of that year. That bounce did not last. BTC/USD fell about 14% in August 2022 and another 3% in September, according to the historical performance cited by Cointelegraph.

Trader Daan Crypto Trades said on X that Bitcoin has been “pretty much in line” with its average July performance so far, while noting the month was still early. He also pointed to the third quarter, which covers July through September, as Bitcoin’s weakest quarter on average even when bull markets are included.

Daan Crypto Trades said the period often sees slower markets, lower liquidity and lower volume during the summer. Liquidity is the amount of buying and selling available in a market. When liquidity is thin, prices can move more sharply because fewer orders are needed to push the market around.

Trader and analyst Rekt Capital also drew a seasonal comparison. In a post on X, he said that if history repeats, Bitcoin’s summer relief rally could strengthen in the second half of July. Cointelegraph reported that Rekt Capital has previously argued August could erase July’s gains before a more traditional bear-market bottom later in the year.

$70,000 is the level traders are watching

Some traders are still mapping out more upside before any possible reversal. Cointelegraph reported that $70,000 has become a common target for the current July bounce.

Peter Anthony, creator of the House of Crypto YouTube channel, said there could be “interesting few days ahead” while reviewing Bitcoin’s daily chart. Another trader cited by Cointelegraph was watching the $67,000 to $73,000 area for a possible short entry, meaning a trade that aims to profit if the price falls.

That same trader expected a bullish July followed by a bearish August into the fourth quarter. Daan Crypto Trades said the fourth quarter is when Bitcoin often sees more volatility in both directions, while asking whether this year will follow the same pattern.

Cointelegraph also reported that several onchain indicators, which track activity recorded directly on the Bitcoin blockchain, have started showing bear-market bottom signals for the first time in four years. At the same time, overall demand has shown only partial signs of recovery, according to Cointelegraph’s summary of market data.

For everyday investors, the debate is less about one July gain and more about whether Bitcoin’s bounce has enough demand behind it. The traders cited are not treating the rally as proof of a new bull market yet, and their main concern is whether August repeats the pattern that followed the 2022 summer rebound.

This story draws on original reporting from Cointelegraph.