Bitcoin holds monthly gain, faces 'choppy' August as 'forced-selling' exhausted, analysts say

Bitcoin (BTC) is closing out July with a gain of approximately 7.5%, despite facing several market challenges including rising expectations of Federal Reserve rate hikes, increasing bond yields, a sell-off in AI-related assets, and a recent security breach involving Coldcard, a prominent bitcoin hardware wallet. Although bitcoin experienced a roughly 3% decline on July 31, it has nonetheless avoided a steeper drop and maintained a price level above its bear market lows, demonstrating relative resilience amid waning risk appetite in other markets.

Analysts from Bitfinex attribute bitcoin’s comparative strength to a reduction in leveraged positions during a late June selloff that pushed the price below $58,000. This earlier deleveraging helped to absorb forced liquidations, with average daily liquidations remaining well below the $400 million to $500 million range typical earlier in the year. As a result, forced selling pressure has been largely exhausted, and bitcoin has not experienced the volatility seen in highly leveraged equity sectors during the same period.

The security incident involving Coldcard resulted in the theft of at least $38 million worth of bitcoin, which has not substantially affected bitcoin’s price to date. However, Paul Howard of trading firm Wincent indicated that while the stolen funds have not yet been liquidated, their future movement could weigh on bitcoin’s price in the near term. The exploit also raises broader concerns about operational risks in self-custody, a core principle of cryptocurrencies, potentially influencing investor confidence.

Looking ahead, market participants are focused on upcoming U.S. jobs data and clearer signals on the Federal Reserve’s monetary policy path, both of which will be key drivers for bitcoin ETF inflows. Analysts expect defensive positioning to persist while rate hike risks remain, with a possibility of a volatile and range-bound bitcoin market in August unless real yields decline or ETF demand improves consistently. As Lacie Zhang from Bitget Wallet notes, the market could handle a neutral Fed stance but not simultaneous headwinds such as a stronger dollar, higher real yields, and weak ETF inflows.