As an experienced analyst, I have closely monitored the bitcoin market and have taken note of the recent on-chain signs suggesting that the leading crypto asset may not record any more significant dumps. The market data from July 6 and 7 indicates a potential local bottom for BTC is near.
As a researcher studying the cryptocurrency market, I’ve noticed that bitcoin (BTC) has reached its lowest point since late February at around $57,000, following several volatile days. However, Bitfinex analysts and I have detected intriguing on-chain indicators suggesting that Bitcoin may not experience any further significant price drops.
Based on the latest Bitfinex Alpha report released this week, the market trends from July 6 and 7 hint towards a possible local bottom for Bitcoin approaching.
Bitcoin May Record Local Bottom Soon
The price drop of Bitcoin can be attributed in part to the significant bitcoin sell-offs by the German Criminal Police (BKA) and the liquidation of claims from the bankrupt crypto exchange Mt Gox.
The German Federal Criminal Police Office (BKA) has been moving substantial amounts of Bitcoin (BTC) to various exchanges, institutional buyers, and over-the-counter markets. Meanwhile, Mt Gox, the bankrupt cryptocurrency exchange, is initiating repayments worth approximately $9 billion in combined Bitcoin and Bitcoin Cash to its creditors. Most of these creditors are projected to gain control over their respective claims during this current month.
The coin transactions have caused Bitcoin sell-offs among all investor groups, amplifying market apprehension, anxiety, and doubt (FUD). Yet, analysts caution that the significance of these sales may be less severe than first anticipated, considering the relatively small amounts of Bitcoin transferred to exchanges.
Market observers hold the view that a market rebound may occur only after surmounting the existing oversupply issue. Nevertheless, according to Bitfinex’s assessment, there is a possibility for recovery even prior to this, given that the sales have already been factored into prices.
Selling Pressure is Diminishing
As a crypto investor, I’ve noticed some positive signs in the market that the pressure might have eased up. For instance, the Coinbase Premium Index, which is a metric that measures the percentage difference between Bitcoin (BTC) prices on Coinbase Pro and other centralized exchanges, has been trending downwards lately. This suggests that demand on Coinbase Pro, which caters to more experienced traders, has decreased compared to other exchanges. Consequently, this could be a potential indication that the market may have reached a bottom and may not experience any further correction. However, it’s essential to keep in mind that investing in crypto carries risks, and no single indicator can guarantee future price movements.
A low Coinbase buying premium implies that there is significant selling activity on the platform’s spot markets from miners, institutional investors like funds and ETFs, as well as government entities. In June, this selling pressure was quite high, causing a low premium. However, the recent unexpected shift to a positive premium despite Bitcoin’s continuous price decline suggests that the selling pressure has lessened on Coinbase.
The Short-Term Holder SOPR metric stands at 0.97. This implies these investors are currently incurring a loss when disposing of Bitcoin, often seen as a precursor to market upward momentum.
As a researcher studying Bitcoin’s market trends, I’ve observed an interesting development: the average funding rate for all Bitcoin perpetual trading pairs has turned negative for the first time since May 1, 2021. This finding adds weight to the hypothesis that Bitcoin might be approaching a local bottom or showing signs of stabilization.
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2024-07-09 14:26