Bitcoin posted its best monthly performance of the year in August, gaining roughly 25% — the largest monthly increase since November 2024. Bitcoin exchange-traded funds mirrored the strength, recording their strongest monthly inflows of the year. According to SoSoValue data cited by CoinTelegraph, Bitcoin ETFs attracted more than $3.5 billion in net inflows in August, a dramatic jump from just $172 million in July.
Despite the impressive numbers, technical analysis suggests Bitcoin still needs to clear one critical hurdle before a new bull market can be confirmed: breaking and holding above the May high.
At the time of writing, Bitcoin traded around $77,250, having briefly fallen below $60,000 in early July. The recent rebound was driven primarily by a short squeeze and the U.S. Treasury’s plan to expand bond repurchases. However, traders note that while Bitcoin reclaimed its 200-day moving average in August and sentiment quickly shifted from fear to extreme greed, the higher-time-frame trend remains bearish. The May high now serves as the dividing line between bullish and bearish scenarios, and Bitcoin has yet to break above that level. The market remains confined within a seven-month range.
The current setup invites comparison with the recovery from the 2023 bear-market bottom. In early 2023, Bitcoin reclaimed its 200-day moving average, retested it, and then pushed higher, establishing a new higher-time-frame uptrend. The key difference is that in 2023, Bitcoin had already broken above a major higher-time-frame high before reclaiming the 200-day average. This time, that breakout has not occurred. Until Bitcoin clears the May high, the current structure could unfold as an inverse version of the 2023 pattern, leaving downside risk in play.
On-chain data and technical indicators are also sending mixed signals. A weekly bullish divergence resembles the signal seen near the 2022 bottom, and the share of Bitcoin supply sitting at an unrealized loss has reached levels historically associated with cycle lows. However, those losses have not yet been widely realized. Past cycle bottoms were typically accompanied by a large-scale capitulation sell-off, an event that has not appeared so far. Analysts caution that with signals divided, it is too early to confirm a bottom or to assert further declines.
Bitcoin lost momentum earlier this year for several reasons. Concerns that quantum computing and artificial intelligence could penetrate crypto encryption dampened retail enthusiasm. Long-term Bitcoin whales holding large positions began taking profits. Meanwhile, the Iran war and rising inflation expectations pushed bond yields higher, triggering a risk-off move across assets. Bitcoin has long wavered between being a risk asset and an inflation hedge, with its fixed supply of 21 million tokens supporting the “digital gold” narrative. That theory has not been validated this year. Notably, gold also struggled for much of the Iran war but has rebounded over the past month, moving similarly to Bitcoin. Some argue both assets rose too far, too fast in the near term.
From a longer-term perspective, the past year has shown that short-term Bitcoin predictions are often futile, as digital assets carry even greater volatility than stocks. Some analysts have turned bullish, suggesting the crypto winter may be over, but such calls warrant caution. Long-term investors can continue to hold Bitcoin or Bitcoin ETFs, though leveraged ETFs should be avoided. The most positive development is the strengthening correlation between Bitcoin and gold since the Iran war began. Gold’s status as an inflation hedge is undisputed, and if Bitcoin continues to track gold, it may still become a form of digital gold over the long run. If that theory holds, Bitcoin offers long-term buying value.
