Bitcoin enjoys largest monthly gains since October 2021

World's largest cryptocurrency rises by 17.7% in July after June's 37.7% slump

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Are hopes rising that Bitcoin may have found its footing? – Photo: Shutterstock
                                

Last month, the price of Bitcoin saw its largest monthly gain since October 2021, rising by 17.7% from an opening price of $19,820.47 on 1 July to a closing price of $23,336.90 on 31 July.

While last month’s gain pales in comparison to the rise of more than 39.9% seen in October 2021 (from $43,816.74 to $61,318.96 according to CoinMarketCap data), July’s performance reversed a substantial bearish trend that had seen the world’s largest cryptocurrency fall from an all-time high $68,789.63 on 10 November to a low of $17,708.62 18 June.

While Bitcoin’s downward trajectory was not caused by the cryptocurrency experiencing a particular scandal, it suffered as a result of shifting macroeconomic trends.

Inflation-weary central banks ended the substantial levels of support provided to markets since the start of the Covid-19 pandemic in 2020 and raised interest rates from their record low levels. This, coupled with anxiety over a potential recession, triggered a cycling out of more speculative investments, such as technology stocks and cryptocurrencies. 

The bite of the crypto winter was made harsher by a series of scandals including the $40bn (£32bn) collapse of the original Terra LUNA cryptocurrency (now rebranded to Terra Classic LUNC), a crypto market liquidity crisis, which led crypto lenders such as Celsius and Voyager Digital seeking bankruptcy protection, and the collapse of crypto hedge fund, Three Arrows Capital.

Could July's gain spell the end of the crypto winter?

Having fallen by 18.5%, 15.7% and 37.7% in April, May and June respectively, Bitcoin’s July rise will be welcomed by cryptocurrency investors. 

The fact that the gain occurred in the same month the US Federal Reserve once again increased interest rates to a range of 2.25% to 2.5% and US inflation rose to a 41-year-high of 9.1%, may underscore in the minds of some that Bitcoin has found its footing and could start to stage a recovery. 

As of 1 August, Bitcoin was trading down by 2.4% on the past 24 hours at $23,181 with a market capitalisation of $443bn.

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