After a major sell-off in June, Bitcoin could have potentially reached a local bottom, according to a new analysis from Bitfinex.
The price of Bitcoin sell below its 120-day range on July 3, dropping as low as $53,219 amid growing concerns about the start of Mt. Gox’s creditor repayments and other market issues.
Bitfinex analysts indicated on July 8 that Bitcoin might have hit a local bottom based on recent market data, even though Mt. Gox has yet to distribute 94,457 BTC—about 67% of the total BTC set aside for creditor repayments.
The analysts also pointed out that the recent price drop was partly caused by the German Federal Criminal Police Office (BKA), which began selling Bitcoin on exchanges, leading to high-volume selling from various investors.
According to Bitfinex, several factors suggest Bitcoin’s price decline may soon end.
U.S. and German Sales Account for Only 4% of Bitcoin Trading Since 2023
One factor is that despite the large nominal value of Bitcoin sold by the German government, it represents a relatively small proportion of all Bitcoin bought and sold since 2023.
Bitfinex analysts noted that the total realized value of Bitcoin traded since 2023 amounts to $224 billion. In comparison, only $9 billion worth of Bitcoin, including sales by the U.S. and German governments, has been sold. This accounts for just 4% of the total realized value since 2023.
“Despite the high nominal value, the actual amount of Bitcoins sold is relatively minor, suggesting that the market impact from government sales is limited,” the report stated.
Low SOPR and Negative Funding Rates Indicate Potential Bottom
Another sign that Bitcoin might be nearing a rebound is the drop in the Spent Output Profit Ratio (SOPR) and negative funding rates.
SOPR measures the realized profit or loss of Bitcoin transactions for a given period. Bitfinex’s research shows that SOPR for short-term holders reached 0.97 as of July 6, indicating that these investors are not selling at a loss, which could signal a potential bottom in the market.
Summary Review: Bitfinex analysts suggest that Bitcoin may have reached a local bottom following the significant sell-off in June. Despite concerns surrounding Mt. Gox’s upcoming creditor repayments and high-volume selling triggered by the German Federal Criminal Police Office (BKA), recent data points to a potential stabilization. The proportion of Bitcoin sold by governments is relatively small compared to the total trading volume since 2023. Additionally, indicators such as low Spent Output Profit Ratio (SOPR) and negative funding rates suggest that the recent decline in Bitcoin’s price could be nearing an end, potentially setting the stage for a market rebound.
Disclaimer: Remember that nothing in this article and everything under the responsibility of Web30 News should be interpreted as financial advice. The information provided is for entertainment and educational purposes only. Investing in cryptocurrency involves inherent risks and potential investors should be aware that capital is at risk and returns are never guaranteed. It is imperative that you conduct thorough research and consult with a qualified financial advisor before making any investment decision.
