After a significant sell-off in recent months, Bitcoin might finally have reached a local bottom, according to the Bitfinex Bitcoin analysis report from analysts at Bitfinex.
This observation is particularly timely as market participants navigate the aftermath of significant volatility and regulatory challenges.
Bitfinex Bitcoin Analysis: Explaining Bitcoin’s Recent Stabilisation
Bitcoin’s value fell sharply below its 120-day average on 3rd July, hitting a low of $53,219. This dramatic fall was largely due to mounting uncertainty around the repayment process for creditors of the defunct Mt. Gox exchange, along with other market pressures.
However, a Bitfinex report dated 8th July provides a more optimistic outlook. Despite the fact that Mt. Gox has yet to distribute 94,457 BTC—approximately 67% of the total BTC collected for creditors—there are indications that the market is finding its footing. Analysts suggest that the recent data from weekend market activities show signs of a potential bottom being formed.
Moreover, the Bitfinex Bitcoin analysis report clarifies that the significant drop was also influenced by actions from the German Federal Criminal Police Office (Bundeskriminalamt, BKA), which began offloading seized Bitcoin onto the market, triggering widespread selling from various investors. Despite these large-scale government sales, they represent only a minor fraction of overall Bitcoin trading volumes. Indeed, the German government and the US have collectively sold about $9 billion worth of Bitcoin.
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The Bitfinex analysts explained, “This compares to only $9 billion from Bitcoin that was seized and subsequently sold by governments, including that from the United States and Germany.” They added that this figure represents only 4% of the total cumulative realised value since 2023 which total a realised capitalisation of $224 billion.
Furthermore, the report highlighted, “Despite the large nominal value, the actual number of Bitcoins transferred to exchanges amounts to only hundreds of millions of dollars, which suggests that the real market impact and the supply overhang from government-seized Bitcoins are relatively minimal.”
Despite the significant volume of Bitcoin introduced to the market by these government actions, the actual market impact is relatively minor. The total value transferred to exchanges only amounts to hundreds of millions of dollars, suggesting that the real market influence of government-seized Bitcoins is quite limited.
Bitfinex Bitcoin Analysis: Market Indicators Suggest a Possible Recovery
The Bitfinex Bitcoin analysis report also discusses several indicators that suggest the market could be stabilising. One such indicator is the Spent Output Profit Ratio (SOPR), which for short-term holders reached 0.97 as of 6th July, indicating that most are not selling at a loss. This metric often suggests market resilience.
Additionally, the average funding rate across all Bitcoin perpetual trading pairs has turned negative for the first time since hitting bottom on 1st May. Historically, periods of negative funding rates, coupled with a recovering SOPR, have often marked the bottom of price corrections. Negative funding rates indicate intense selling pressure or that sellers are dominating the market. However, they can also suggest that the market is oversold. When this oversold condition coincides with a recovering SOPR, it typically signals that the market is establishing a floor.
In conclusion, despite recent turbulence caused by external factors and panic selling, fundamental indicators highlighted in Bitfinex’s analysis suggest a stabilisation of Bitcoin prices, potentially signalling the end of the current market turmoil. As the situation unfolds, it remains crucial for market participants to proceed with caution, armed with the latest insights and analyses from trusted sources in the cryptocurrency space.
For individuals interested in keeping up to date with Bitfinex Bitcoin Analysis, the latest trends and analyses in cryptocurrency, staying connected to reliable sources like The BIT Journal can be invaluable. With signs of a potential recovery on the horizon, being well-informed can help investors and enthusiasts make better decisions.
