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July closed with Bitcoin up almost 17%, but now, analysts are turning to how long the bullish trend can last.

Bitcoin (BTC) starts a new week and a new month on a cautiously positive footing after protecting crucial levels.

After an intense July in which macro factors provided significant volatility, BTC price action managed to provide both a weekly and monthly candle favoring the bulls.

The road to some form of recovery continues, and at some points in recent weeks, it seemed like Bitcoin would suffer even harder on the back of June’s 40% losses.

Now, however, there is already a sense of optimism among analysts, but one thing remains clear — this “bear market rally” does not mean the end of the tunnel yet.

As Summer 2022 enters its final month, Cointelegraph takes a look at the potential market triggers at play for Bitcoin as it lingers near its highest levels since mid-June.

Spot price snatches back bear market trendlines

In terms of Bitcoin’s July performance, things could have been a lot worse.

After June saw losses of nearly 40%, BTC/USD managed to close out last month with respectable 16.8% gains, according to data from analytics resource Coinglass.

While those gains at one point passed 20%, July’s tally nonetheless remains Bitcoin’s best since October 2021 — before the latest all-time highs of $69,000 hit.

With solid foundations in place, the question among analysts is now if and how long the party can continue.

Fun day!

At the D, W, M close, BTC closed D red. W & M closed green and Trend Precognition fired a new Long on the M. It's tentative until the candle closes, but the fact that it closed above the 50 Month MA makes it interesting to. Time to chill. Back to charts in the morning. pic.twitter.com/ImWjNcXx91

— Material Indicators (@MI_Algos) August 1, 2022

“First monthly close in green since March,” popular trader and analyst Josh Rager responded.

“After monthly closed above 2017 all-time high from last cycle, price is slowly climbing up. Looks good so far and even if this is a ‘bear market,’ I'm happy to buy dips right now.”

Others were more cautious, among them fellow trader and analyst Crypto Tony, who noted that the recent local highs just above $24,000 were still acting as unchallenged resistance on the day.

“I am looking for a breakdown of this Bitcoin pattern and remain short while we are below the $24,000 supply zone we rejected off,” he confirmed to Twitter followers.

Nonetheless, the weekly and monthly close sealed some important levels as support for Bitcoin. Specifically, the 200-week moving average flipped from resistance on the weekly chart, and BTC/USD retained its realized price, data from Cointelegraph Markets Pro and TradingView shows.

In its latest weekly newsletter released last week, Blockchain infrastructure and cryptocurrency mining firm Blockware also noted that a reclaim of the 180-period exponential hull moving average (EHMA) at just under $22,000 on the monthly chart would be “quite bullish.”

“Monthly also appears to be reclaiming its 180-week EHMA, a level we’ve talked about over the last few months as a macro accumulation area for BTC. This closes Sunday night EST as well,” lead insights analyst William Clemente wrote.

“If it does reclaim, would be quite bullish as failed breakdowns/breakouts are a strong signal.”

Macro triggers cool for August

The macro picture to begin August is one of relief mixed with a sense of distrust over how the rest of the year could play out.

On short timeframes, United States equities survived last month’s Federal Reserve-induced volatility to end July on a high. As Cointelegraph reported, calls for an extended rally in stocks are increasing, something which could only be good news for highly-correlated crypto markets.

Analyzing the state of commodities, meanwhile, popular Twitter account Game of Trades predicted that oil would soon lose ground, and that this would have a conspicuous impact on U.S. inflation.

Currently at more than forty-year highs, the Consumer Price Index (CPI) is responsible for the Fed rate hikes pressuring risk assets across the board. An about turn in inflation and thus Fed policy could thus swiftly turn the tables.

“Big sellers stepped in for oil on Friday,” one post from the weekend read.

“Looks like oil is poised for a breakdown, taking the CPI with it.”

Brent crude price plunges as West eases efforts to restrict Russian #oil trading w/#inflation and energy risks mount. Plan to shut Moscow out of maritime insurance market delayed. https://t.co/fwQPGft0Uc pic.twitter.com/44Lne5P7qT

— Holger Zschaepitz (@Schuldensuehner) August 1, 2022

The global picture when it comes to commodities is not that straightforward, however, with macro analyst Alex Krueger conversely warning that Europe’s energy crisis had not yet played out in market pricing.

For Bitcoin, then, the current recovery is more a “bear market rally” than a true return to strength.

“Yes this is a bear market rally ... for now,” Krueger wrote.

“Thing is if inflation comes down fast enough, which is feasible, and Europe's energy crisis is not exacerbated by a harsh winter, also feasible, this could end up being the beginning of the bull market. Nobody knows as of now.”

Krueger added that the status quo should remain until “at least until the end of August” when fresh Fed events impact the market.

In order of importance, he listed the September key rate decision, September CPI, the Fed’s Jackson Hole summit on August 25 and the August 10 CPI print for July.

Most upcoming important events, in order:

#1 Sep22: FOMC
#2 Sep13: CPI
#3 Aug25: Jackson Hole
#4 Aug10: CPI

Expect markets to de-risk (sell-off) the days before each event if market running hot into them.

Then of course we have the infamous ETH merge around Sep19.

— Alex Krüger (@krugermacro) July 30, 2022

Turning to U.S. dollar strength, the U.S. dollar index (DXY) remained at lows not seen for nearly a month on the day, currently below 106.

For Game of Trades, the index was more significant than the numbers. After its parabolic uptrend, a clear change of direction was now visible on the DXY daily chart.

“DXY has broken its parabola. There is only one way a broken parabola ends,” it commented.

RSI raises questions over price bottom

Turning to on-chain signals, a rebound in one of Bitcoin’s core fundamentals has not been enough to convince analyst Venturefounder that the BTC price bottom is in.

Zooming out to a multi-year view and comparing BTC/USD across market cycles, the popular content creator argued that Bitcoin’s relative strength index (DXY) is still suppressed after its peak in April 2021.

RSI measures how overbought or oversold BTC/USD is at a certain price, and since May has seen its lowest readings on record.

Despite suggesting that Bitcoin is trading wildly lower than its fair value, RSI has yet to regain the “bullish momentum” that characterized the run past $20,000 and beyond at the end of 2020.

In April 2021, Bitcoin hit $58,000 before halving in price by the end of July.

“The only way to see the July 2022 low as the cycle bottom is if you were to see the April 2021 high as the cycle top for this cycle,” Venturefounder stated.

“Bitcoin and Altcoins RSI and bullish momentum peaked in April 2021 and never recovered for the rest of this cycle. Do you think we bottomed?”

Another conspicuous oversold period in RSI came immediately after the March 2020 COVID-19 crash, that event significantly impacting price strength going into the latest block subsidy halving.

BTC/USD, of course, never looked back, going on to reclaim its all-time high of the time around six months later.

Purpose ETF finally adds to holdings

Things could be looking up for institutional Bitcoin involvement as subtle signs of recovery play out in statistics.

The latest such signal comes from the world’s first Bitcoin spot price exchange-traded fund (ETF), the Purpose Bitcoin ETF.

After its holdings suddenly declined by 50% in June, the product is finally adding BTC again, suggesting that demand is no longer falling.

Purpose added 2,600 BTC, something commentator Jan Wuestenfeld additionally noted ended several weeks of dormancy.

“Assets under management still far away from the all-time high, however,” he added.

The recovery trend is far from omnipresent, however. A look at the Grayscale Bitcoin Trust (GBTC) continues the troublesome trend of lack of demand.

The fund’s premium to spot price, long in fact a discount, is now circling record lows of nearly 35%, data from Coinglass confirms.

Grayscale continues legal action against U.S. regulators over their refusal to allow a spot Bitcoin ETF to launch on the domestic market. GBTC would convert to such an ETF were conditions to allow.

New month, new fear

It was a nice ride, but crypto market sentiment is already back in the “fear” zone.

Related: Top 5 cryptocurrencies to watch this week: BTC, BNB, UNI, FIL, THETA

The latest readings from the Crypto Fear & Greed Index confirm that “neutral” sentiment could barely last a day, and that despite high prices prevailing, cold feet are hard to shake.

The Index measures 33/100 as of Aug. 1, still high compared to recent months but already considerably below the highs of 42/100 seen just days ago.

For research firm Santiment, however, there remains a cause for optimism. The firm’s proprietary metric governing transaction volume relative to overall network value for Bitcoin ended July in “neutral” territory of its own.

The network value to transaction (NVT) token circulation model, after printing bullish divergences in May and June, thus came through at the latest monthly close.

“With a neutral signal now as prices have risen and token circulation has declined slightly, August can move either direction,” Santiment summarized in a Twitter update about the latest numbers.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.